The number of people withdrawing from their pensions has increased by six percent in the period from July through to September this year compared to 2019, data from HM Revenue & Customs has shown.
In 2020, 347,000 individuals withdrew funds from their pensions between July and September, a 6% increase from the 327,000 who withdrew during the same period last year.
However, the amount withdrawn has decreased by 2% for the same period. From July through to September £2.3bn was withdrawn from pensions flexibly and in 2019, £2.4bn was withdrawn. The average amount withdrawn per individual in 2020 was £6,700 compared to £7,200 during the same three months last year.
According to HMRC, the number of people making withdrawals typically peaks in April, May and June before dropping from July. However, this year withdrawals have increased, which it said could be a result of financial pressure from the coronavirus pandemic.
Commenting on the statistics, Just Group group communications director Stephen Lowe said: “The first quarter of the financial year, which coincided with the height of the Covid restrictions, was quieter and although activity has picked up in the latest quarter, it is still a little lower than we would expect to see in more normal circumstances.
“It’s positive that people do not appear to have panicked and started emptying their retirement funds in great numbers. But these figures must be treated very cautiously because they don’t cover people who are just accessing tax-free cash or who are emptying pensions under ‘small pot’ rules.”
Elsewhere, interactive investor head of pensions and savings Becky O’Connor said: “The increase in the number of people turning to their pension pots this year suggests that more people need to access their pension pots to meet living costs.
“Some older people may also be accessing cash to help children with things like first home deposits, as continued house price growth together with tighter mortgage lending has made getting on the ladder more challenging.”
This article was previously published on Professionaladviser.com