Pension Freedoms Still Highly Popular With Expat Retirement Savers

Retirement savers are still taking cash from their pension pots, but less has been taken out than in 2018.

It seems pensions freedoms are still the name of the game for soon-to-be expat retirees, even although last year’s total withdrawals were slightly higher than this year’s to date. Official data revealed by HM Revenue and Customs shows some £30 billion sterling withdrawn since pension freedoms were introduced in 2015, with more detailed data for 2019’s third quarter showing £2.4 billion taken in flexible drawdowns. The figure is five per cent lower than that of the second quarter, but an impressive 21 per cent higher than in the same quarter of 2018.

Averages of amounts drawn down came out at £7,250, a fall of 12 per cent over 2019’s second quarter and also lower than amounts removed during last year’s third quarter. The actual numbers of those taking advantage of pension freedoms has grown by 27 per cent over last year, now totalling 327,000. According to former pensions minister Steve Web, savers are now far more savvy as regards the timing of their drawdowns, with many spreading their withdrawals over several tax years in order to reduce their tax bills.

The trend is causing the financial advice sector some concern, with reports stating many thousands of pension savers aren’t taking financial advice before making a move. IFAs are warning there’s a risk of savers running short of funds after retirement if they’ve withdrawn cash without consulting a professional. Oddly, the ability to do just that was one strong feature of the pension freedom rules themselves, as the former single option of buying a low-interest annuity with pension savings had been proven to be unacceptably restrictive to savers but hugely remunerative for insurers and IFAs selling the products.