The overall value of money being withdrawn from pension pots rose to £45,638m in 2021/22 from £37,432m in 2020/21. An increase of 22%. 40% of regular withdrawals were withdrawn at an annual rate of over 8% of the pot value. 33.4% of plans accessed for the first time in 2021/22 were accessed by plan holders who took regulated advice. The number of DB to DC transfers continued to fall from 30,596 in 2020/21 to 26,619 in 2021/22. The number of firms that received a DB to DC pension transfer also fell from 63 to 57.
Full FCA analysis available here:
Andrew Tully technical director at Canada Life comments on the FCA retirement income market data published: “Today’s data shows that the pandemic paralysis evidenced last year has clearly worn off with pension access increasing by almost a fifth. All products are experiencing a boom in interest with demand for UFPLS increasing the most by 28%. Drawdowns and annuities have also clearly become more popular after experiencing a decline in interest last year.
“People are withdrawing money from their pensions in far greater numbers than last year, while this could be a reaction to the pandemic when people generally had less opportunity to purchase some of the big ticket items such as holidays and cars. On the other hand, this could be the start of people raiding their pensions to plug a gap in income or help younger relatives on to the property ladder.
“Many people who have opted to make regular withdrawals from their pensions do so at a rate of 8% or more and it is the most popular withdrawal rate for all pot sizes up to £249,000. While for some, this may be a deliberate strategy to deplete pots in a specific time-horizon if they have other assets to fall back on. For others, this may mean they run out of money in the years to come.
“It’s reassuring to see that a third of plans accessed were by people who had received regulated financial advice. The retirement landscape is complex with plenty of potentially costly pitfalls and a financial adviser will always be best placed to guide you safely through the options.”
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