All Policies Include Coronavirus Cover

Coronavirus FAQs

Questions about cover for coronavirus? Read our FAQs and find out what our policies can do for you. If you would like to contact us, please note we are currently only available 09:00 to 17:30 Monday to Friday due to reduced operational capacity. Thank you.

Older Brits quick to use pension freedoms

20 July 2015 09:23

People can now use their pension savings how they wish

People can now use their pension savings how they wish

It has now been three months since savers were given the freedom to spend the money in their pension pots how they want.

And in the first two months, they opted to withdraw a total of £1.8 billion from their pots, according to new figures.

Since April 6, people aged over 55 have been able to use the money in their defined contribution pots as they wish, instead of having to purchase an annuity.

Some have been using their savings to travel during their retirement - something that can be covered with an older people's travel insurance policy.

'Over a billion withdrawn in cash'

The pension freedoms mean that instead of being required to buy an annuity, people can take their pots how they wish.

The Association of British Insurers (ABI) says 65,000 cash withdrawals - worth a total of over £1 billion - were made from pension pots in April and May.

A further £800 million worth of payments were taken out from income drawdown policies.

The same period saw savers invest a total of £630 million to purchase more than 11,000 retirement annuities, with £720 million spent on over 10,000 income drawdown policies.

That compares to the near £1.2 billion per month that was being put into annuities in 2012, and the £100 million a month that was being put into income drawdown policies.

The average amount withdrawn in cash from pension pots has been £15,500, while the typical annuity and income drawdown policy have been bought for nearly £56,000 and almost £70,000 respectively, the ABI says.

Action plan

The ABI has launched an action plan to help the pension reforms run smoothly.

It follows reports of payout delays and some savers facing high charges for withdrawing their money.

The association says that during April and May, nearly half those purchasing an annuity switched pension providers, suggesting that many savers are actively seeking out the best deal.