Pension savers withdrew £27m a day from their retirement savings in the first three months after the new pension freedoms were launched in April, the Association of British Insurers (ABI) has revealed.
That means people aged 55 and over have grabbed back around £2.5bn that had been earmarked to provide them with an income in retirement.
The ABI's new figures cover April to June – when around £1.3bn in total was paid out in cash lump sums, with an average payment size of just under £15,000.
That's cash people have withdrawn either to switch to another pension provider or to splash out – after paying tax on three-quarters of the money – on anything they like, such as holidays or a new car.
Meanwhile, around £1.1bn was paid out through 264,000 income-drawdown payments – an arrangement where a saver leaves their pension pot intact but takes an income directly from it.
The average income-drawdown payment was nearly £4,200.
On the other hand, the ABI figures showed that over the same three months savers invested £2.3bn in a total of 37,500 products to give them a regular income.Reuse content