230,000 access £4.3bn in year one of new pension laws - HMRC

HMRC data shows that in the twelve months following the launch of the pension freedoms on April 6, 2015, when people aged 55 and over were allowed to take their pension pot how they wished, subject to tax, rather than through an annuity, that 232,000 people accessed £4.3 billion.

The pension freedom figures were taken from information voluntarily reported to HMRC by pension scheme administrators and include those who are taking flexible incomes from their savings, and buying annuities.

However, the numbers appear to be lower than previous estimates by City watchdog, the Financial Conduct Authority (FCA) which had reported that 179,000 people took money from their pensions in the third quarter of 2015 alone.

This may be because of under-reporting to HM Revenue and Customs (HMRC) as until this month it was not compulsory for pension funds to tell HMRC when cash was being withdrawn.

Economic Secretary to the Treasury Harriett Baldwin said: “It’s only right that people should have a choice over what they do with their money and in their first year our successful pension freedoms have already given thousands of people access and responsibility over their hard-earned savings,” said Harriett Baldwin, the economic secretary to the Treasury.

Also commenting on the HMRC figures, Richard Parkin, head of pensions at Fidelity International, said: “Our experience also demonstrates that taking retirement savings as cash has been a popular choice over the first year freedoms.

“The challenge we are now facing is how retirees should manage this lump sum while also making their monies last.”