This might indicate the value of advice at a time of concern. According to Quilter's analysis of HM Revenue & Customs' latest statistics on pensions withdrawals, more people in retirement are taking more out of their pensions than before.
This could indicate people are having to dip into their savings earlier on in their retirement journey than they otherwise might have planned.
HMRC's statistics showed:
- Throughout October, November and December 2020, £2.4bn was withdrawn from pensions flexibly.
- This represents a 6 per cent increase year-on-year from £2.2bn withdrawn throughout the same months in 2019.
- The total value of flexible withdrawals from pensions since flexibility changes in 2015 has exceeded £42bn.
- 360,000 individuals withdrew from pensions throughout October, November and December 2020, a 10 per cent increase from 327,000 during the same months of the previous year.
- There was a 4 per cent increase in the number of individuals withdrawing compared to the previous three months.
Jon Greer, head of retirement policy at Quilter, explains: "With 2020 now in the rear-view mirror, it is clear it has had a profound effect on the way people interact with their pensions.
"The final quarter of the year saw an increase in both the total value accessed and the number of individuals taking these payments, compared to the previous three months.
"The 10 per cent increase of people taking payments from their pensions compared to the same quarter in the previous year is a worrying trend and begins to show more and more people are requiring additional money as lockdown restrictions remain in place across the whole country."
Ms Springall adds: "Indeed, in light of the coronavirus pandemic, some consumers may have made the decision to dip into their pot using pension freedoms, or plan to do so soon.
"Billions of pounds were taken out of pensions during Q3 2020 according to HMRC, and this money could have been drawn for more immediate financial issues or even to help a family member during challenging times."
For both, this is a source of great concern, as people fail to take much-needed advice and could end up eroding their pension pots too early in retirement to pay for today's expenses.
Mr Greer adds: "The last thing we want to see is a spike in pension withdrawals that results in long-term savings being left devastated.
"People need to consider their pension arrangements before dipping in, while also being mindful of policies such as the money purchase annual allowance, which could materially impact someone looking for short-term financial relief from their pension, but maintaining that desire to work and save for retirement."
The self-employed
Some clients approaching their anticipated retirement dates are self-employed, and the protracted periods of lockdowns have caused significant problems for many people whose income has been severely curtailed as a result of the coronavirus crisis.
Some clients who had been in full-time employment until recent years and then decided to become self-employed as they set on their path to retirement have also found the past year full of uncertainty and concern.
Yet with clear, calm advice supporting them, Mr Morris says his self-employed clients have been "largely unaffected", despite the natural concerns they have had.
