Savers have withdrawn at least £4.35bn from pensions in the year since new flexibilities were launched, official figures show.
Data from HMRC shows that 232,000 people have taken advantage of changes to the pension rules, which were introduced in April 2015.
Since then, anyone reaching retirement age has been able to withdraw up to 100% of their pension, subject to tax on everything above the first 25% they take out. Savers can withdraw the whole fund at once, or take sums out as allowed by their pension provider.
The figures show that the number of people withdrawing money was higher in the first three months of 2016 than in the previous quarter, rising to 74,000 from 67,000.
However, the number and total sums taken were both lower than in each of the first two quarters after the rules came into effect. In the first quarter after the change, 84,000 individuals withdrew a total of £1.5bn. In the first three months of 2016, the total withdrawn was £820m.
The figures for the first year are based on providers who opted tomake their data available to the government, but reporting became compulsory in April 2016.
They show there have been 516,000 payments in the first year, illustrating how many savers have opted to make multiple withdrawals rather than taking 100% of their fund in one go.
The changes, which were unveiled by the chancellor George Osborne in his 2014 budget, led to the then pension minister Steve Webb saying he didn’t mind if wealthy pensioners used their funds to buy Lamborghinis.
Gareth Shaw, head of consumer affairs at Saga Investment Services, said the figures showed “the enormous popularity of the new pension rules”.
He said: “The 232,000 savers who have accessed their pension since April 2015 have done so on multiple occasions – 516,000 in fact – reflecting that people are dipping in and out of their pension as and when they need to.
“While data from other sources, such as the FCA [Financial Conduct Authority], show that many people have withdrawn larger amounts from their pension, this data shows an average withdrawal of just £18,750 – hardly Lamborghini money.”
However, Shaw said the figures were likely to be understating the reality. He added: “What’s missing is the amount of tax revenue generated – this is likely to have well exceeded the government’s initial tax expectations of £320m.”
Stephen Lowe of specialist advisers Just Retirement said the figures showed the initial “freedom frenzy” had calmed down.
He said: “Overall £4.35bn has been taken out of the pensions environment, yet [what] we still don’t know is whether people are prioritising short-term consumption above long-term income needs. The likelihood is that most people are acting sensibly but that a significant minority will end up regretting taking too much too soon.”
The 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.”
