Savers are taking more and more small payments from their pensions

Mark Sands
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Osborne introduced the pensions freedom regime in April 2015 (Source: Getty)

New data from HMRC shows savers are taking more regular, and smaller, lump sums from their pensions.

Former chancellor George Osborne introduced the pensions freedom regime in 2015, allowing savers to take up to a quarter of their retirement savings as a lump sum without paying tax.

And HMRC says that £9.2bn has been taken from pension pots since the regime was introduced in a total of 1.5m payments.

But the latest figures also show that savers are becoming increasingly willing to take small sums from their pensions.

Over the last nine months, the numbers accessing their savings has remained broadly flat, while movement in the totals withdrawn has largely been downward.

However, the numbers of lump sums taken from their savings has increased by almost a fifth.

City minister Simon Kirby said: “Giving people freedom over what they do with their hard-earned savings, whether it’s buying an annuity or taking a cash lump sum, is the right thing to do.

“These figures show that people continue to take advantage of the choices on offer: choices ‎only made available since the government’s landmark pension freedoms were introduced in April 2015.”

However, AJ Bell pensions expert Gareth James warned against seeing the £9.2bn withdrawn by savers as a measure of success.

“Are they using it to provide a regular and sustainable income as pensions are designed to do, or are they spending it too quickly and likely to run out of money too quickly?” James said.

“It is important that the government carries out a more detailed analysis of how the pension freedoms are being used before any realistic assessment of their success can be made.”

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