Saturday, April 13, 2024

Pension savers withdraw £70bn in decade since ‘freedoms’



A decade on from George Osborne’s ‘pension freedoms’ Finances bombshell announcement in 2014, the most recent HMRC knowledge confirmed that £70bn of retirement money has since been accessed flexibly by British savers.

The reforms had been applied in April 2015 and ditched restrictions that beforehand utilized to ‘drawdown’ and ushered in a brand new period of freedom and selection for savers aged 55 and over.

Tom Selby, director of public coverage at AJ Bell, mentioned the change was arguably probably the most vital pension tax reform in nearly 100 years and a reform which has revolutionised the retirement earnings market.

He mentioned: “Brits can now construct a retirement earnings plan to go well with their wants, probably combining the safety of an annuity with the pliability of maintaining cash invested by means of drawdown.

“Reforms to pensions demise advantages have additionally been a sport changer, permitting individuals to go on their pensions fully tax-free to family members in the event that they die earlier than age 75.”

He mentioned that bettering the help obtainable to savers and retirees is essential. “The joint assessment being carried out by the Treasury and FCA on the recommendation steering boundary is central to this, with the proposed ‘Focused Assist’ regime probably enabling companies to supply extra helpful steering to all.

“Selling the advantages of regulated recommendation, which stays the gold customary in the case of serving to individuals make good monetary choices, can be essential.”

The corporate has provide you with ten key numbers that inform a narrative about retiring in Britain since 2015:

  1. £72.2bn – The whole worth of pensions accessed ‘flexibly’ because the pension freedoms had been launched in April 2015. (Supply: newest obtainable HMRC knowledge)
  2. 705,666 – The variety of pension pots accessed for the primary time in 2021/22 (the newest 12 months official knowledge is obtainable). (Supply: FCA knowledge)
  3. 205,641 – New drawdown insurance policies entered into however not absolutely withdrawn in 2021/22 (the newest 12 months official knowledge is obtainable). (Supply: FCA knowledge)
  4. 68,514 – Variety of annuities bought in 2021/22 (the newest 12 months official knowledge is obtainable). (Supply: FCA knowledge)
  5. 4% – Proportion of plans accessed for the primary time the place plan holders took regulated monetary recommendation in 2021/22 (the newest 12 months official knowledge is obtainable). (Supply: FCA knowledge)
  6. 40% – Proportion of standard drawdown earnings funds withdrawn at a fee of over 8% of the pot worth in 2021/22 (the newest 12 months official knowledge is obtainable). (Supply: FCA knowledge)
  7. 6% – Proportion of individuals aged 55+ who had been saving in an outlined contribution (DC) pension in Could 2022 who mentioned they’d absolutely encashed the pension, or taken out a lump sum, to cowl day-to-day bills. (Supply: FCA Monetary Lives Survey)
  8. 26,619 – Whole variety of outlined profit (DB) to outlined contribution (DC) transfers carried out in 2021/22 (the newest 12 months official knowledge is obtainable). (Supply: FCA knowledge)
  9. £1.17bn – Amount of cash reclaimed by savers overtaxed on their pension withdrawals since April 2015. (Supply: AJ Bell evaluation of HMRC knowledge)
  10. £3,216 – Common reclaim worth within the newest quarter (This fall 2023). (Supply: AJ Bell evaluation of HMRC knowledge)

 



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