The Flexible Payments from Pensions April 2020 Official Statistics highlighted that 348,000 individuals withdrew from pensions in the first quarter of this year, marking a 23% increase from 284,000 in the same quarter of the previous year.

There has also been an increase in the number of individuals withdrawing compared to the previous quarter Q4 2019 (327,000) – which reflects normal seasonal patterns.

Withdrawal numbers typically rise in Q1, before peaking in Q2, as this coincides with the beginning of a new tax year. This seasonality comes as some individuals access their pension over a number of years and often use the flexibility to withdraw funds at the beginning of the tax year.

The average amount withdrawn per individual in Q1 2020 was £7,100, falling by 3% from £7,300 in Q1 2019. Since reporting became mandatory in Q2 2016, average withdrawals have been falling steadily and consistently, with peaks in the second quarter of each year becoming a noticeable trend.

Pension freedom tax rules allow members of defined contribution pension schemes to access their pension savings early, provided they have reached the required minimum pension age (currently 55).

Scheme members can take their pension benefits in a number of ways. This could be as one or more payments a year for a number of years, several payments a year over a shorter timeframe or the full value of the fund could be taken in one payment.

Alistair McQueen, head of savings and retirement at Aviva, said: “Today’s figures, through to the end of March 2020, give an early indication of pension freedom behaviour in response to coronavirus. Positively, there is no early sign of a ‘dash for cash’.

“Q1 2020 saw a record £2.46bn of taxable private pension wealth withdrawn by 348,000 individuals. But the quarter-on-quarter increase is in line with previous trends.

“Q1 typically sees an increase in withdrawals, as people approach the tax-year end. This year, the first quarter saw a 10% increase in total withdrawals, compared to Q4 2019.

“This is lower than the 13% increase witnessed in Q1 2018, and only marginally up on the 8% increase in 2019, suggesting no significant early change of behaviour in response to coronavirus.

“This is good news. Aviva has been encouraging its customers to keep calm, focus on the longer-term and seek help from services such as the government’s Pension Wise service. Today’s figures give early confidence that this guidance is being followed.”

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