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Over 55s withdraw £4.7 billion under new pension freedoms


Figures from the Association of British Insurers (ABI) have shown that the over 55s have withdrawn £4.7 billion under the new pension freedoms introduced in April.

There have been 166,700 cash lump sum payments worth £2.5 billion, working out to an average payment of just under £15,000. There has also been £2.2 billion paid out via 660,000 income drawdown payments, with an average payment working out at £3,600.

Annuity sales have also seen their first increase quarter on quarter for the last three years. In this quarter, there were 22,380 annuities sold to the total of £1.17 billion, compared to 18,200 to the total of £990 million last quarter.

The data also shows that the over 55s are looking around for the best deal as 60% of people have changed provider when buying an income drawdown policy, and 40% of people looking to buy an annuity also chose to change their provider.

The ABI’s Director for Long Terms Savings Policy, Dr Yvonne Braun, said:
"The peaceful pension revolution continues. While providers continue to meet high levels of demand, it’s clear that people are taking a sensible approach and considering how they will pay for their retirement.

“Despite some ringing the death knell for annuities, this seems to have been premature. An increasing number of people are recognising the value of a guaranteed income, with annuity sales rising this quarter. There are also initial signs that the number of people accessing their pension pot as cash is beginning to settle down, with larger pots continuing to be used to buy retirement income products.

“However, the figures also show that ensuring people save enough for retirement remains our key challenge. With life expectancy increasing and final salary pension provision declining, we must now turn our attention to helping customers grow bigger pots.”

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