Broadstone head of defined contribution workplace savings, Damon Hopkins, commented: “It is great to see an extra half a million savers making contributions to their personal pension.”
However, he warned that it could reflect a “challenging economic time” with older workers entering back into the workforce to top up their savings and reinforcing their financial buffer for later life.
Pensions freedoms
HMRC also revealed the total value of taxable payments withdrawn flexibly from pensions since 2015, when pensions freedoms were introduced, was £72.2bn.
The data added that, in 2022 to 2023, £12.9bn in taxable payments was withdrawn from pensions flexibly.
This represented an increase on the £11.2bn and £9.3bn in 2021 to 2022 and 2020 to 2021 respectively.
HMRC also revealed that between January 1 2023 and March 31 2023, £3.4bn of taxable payments was withdrawn from pensions flexibly by 519,000 individuals across 1.2mn payments.
This represented an 18 per cent increase in the value of payments withdrawn and a 17 per cent increase in the number of individuals withdrawing in Q1 2023 when compared to the same quarter in 2022.
The data additionally reported that the average taxable withdrawal per person was £6,600 in this period.
Canada Life retirement income director, Nick Flynn, commented: “The floodgates have well and truly opened as record amounts are being stripped from pensions.”
While Flynn stated that there is “no need hit the panic button”, he added “I hope these people have a backup plan to be able to generate a wage in retirement”.
“The current cost-of-living crisis may be driving some of this behaviour, and no doubt pent up demand following the pandemic will also be behind these record withdrawals,” Flynn suggested.
“It is important as an industry for us to continue to focus on providing support to ensure people are helped to make the best decisions.”
He added that this includes phased withdrawals to make sure people are as tax efficient as possible.
tom.dunstan@ft.com
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