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almost 180,000 people in dash for cash

Have you had your slice of the new cash sloshing around as a result of the government’s pension reforms?

New data reveals the scale of the so-called “dash for cash”. Collected from retirement income providers, the data reveals 178,990 people accessed their pensions, of whom 120,969 (68%) cashed in their entire fund. The remaining 58,021 pensions (32%) were used to take an income after tax-free cash.

The data, published by the Financial Conduct Authority (FCA), is for the period from July to September 2015 and covered an estimated 95% of assets in contract-based pensions.

The government’s pension reforms brought about significant changes in the way consumers can access their pensions and the data provides insight into how people are using the new freedoms.

The report covers:

  • Choices made by consumers accessing their pensions
  • Guaranteed annuity rates – levels taken up and not taken up
  • Levels of pension withdrawals for customers making a partial withdrawal
  • Use of regulated advisers
  • Consumers’ stated use of Pension Wise
  • Whether consumers change providers when accessing their pensions

In the quarter July to September 2015 178,990 pensions were accessed by consumers to

take an income or fully withdraw their money as cash. Of these:

• 120,969 pensions (68%) were fully cashed out. Of the pensions that were fully cashed out

88% were small pot pensions

• 58,021 pensions (32%) were used to take an income after tax free cash, i.e. using partial

drawdown, partial Uncrystallised Fund Pension Lump Sum (UFPLS) or to buy an annuity.

 

Of the 178,990 pensions that were accessed:

• 60,600 (34%) used UFPLS (both partial and full withdrawals)

• 54,604 (30%) used income drawdown (both partial and full withdrawals)

• 23,385 (13%) were used to purchase an annuity

• 40,401 (23%) were full withdrawals using small pot lump sum payments

Of the above drawdown and annuity figures, 3381 were used to purchase what are termed 3rd way product..

 

Customers using drawdown or UFPLS made partial withdrawals in the quarter at the following

rates as a percentage of their pension pot after tax free cash:

• Less than 2% 180,321 (71%)

• 2% – 3.99% 32,169 (13%)

• 4% – 5.99% 7,243 (3%)

• 6% – 7.99% 5,862 (2%)

• 8% – 9.99% 4,442 (2%)

• 10% or more 24,396 (10%)

Customers aged 55-59 made the highest level of withdrawals as a percentage of their pension

Pot and 27% of these customers took an income of 10% or more of their pot after

any tax free cash was deducted.

The data includes regular and ad-hoc withdrawals, existing customers who entered into drawdown historically and customers accessing their pensions for the first time.

www.fca.org.uk

The full Retirement Income Market Data can be found here.

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