A minority of individuals making use of new pension freedoms have been warned that they may be ‘withdrawing too much too soon’ from their pension pots.
New data from the Association of British Insurers (ABI) has suggested that a small number of savers may be withdrawing cash from their pots at rates that would see their money run out in a decade or less.
The data revealed that 4% of pots where withdrawals were made had 10% or more of their value extracted.
However, the ABI also stated that, after the first full year since pension freedoms were introduced, most individuals are being sensible.
Yvonne Braun, director of policy, long-term savings and protection at the ABI, said: ‘New data released shows that more than half of pots are having less than 1% withdrawn a quarter, which seems to indicate most people are taking a sensible approach.’
A Government spokesperson commented: ‘We are working with our partners, such as Pension Wise and the Department for Work and Pensions, to ensure consumers are protected and that there is clear information to help people understand their options.’
Since April 2015, retirees aged 55 or over have been able to take advantage of new rules which give them complete freedom over their pension pot and how they choose to generate an income in retirement.