The number of pension savers choosing to drawdown money from their pension fell by 42% in April 2020 compared to the same month last year. The latest data published by trade body the Association of British Insurers (ABI) has also shown the number of people taking a tax-free lump from their pension more than halved (-53%), while those withdrawing their entire pension fell by 30%. Figures for March 2020 had already started to show this cautious trend, as 15% fewer people chose to use a pension drawdown, 29% fewer people took out a tax-free lump sum and those withdrawing all their pension in one go fell by a fifth. Those selecting an annuity in March and April also fell by 36% and 56% respectively.

The ABI claim that pension savers are choosing to ride out the falls and volatility of the stock market and are holding onto their pension’s funds during a period of uncertainty about employment. The trade body anticipates that as lockdown eases, pension withdrawals may increase due to pent-up demand and in response to the end of the Government furlough scheme in October. The potential of a high number of job losses arising once the Coronavirus Job Retention Scheme ends could see older employees having to revise their retirement plans with the potential of using their pension pots to fund an early retirement or as financial support while seeking a new role.

Representatives from the pension industry do agree that access to financial advice for those that unexpectedly find themselves needing to review their pension options will be essential. Rob Yuille, assistant director, head of long-term savings at the ABI, said: “As Covid-19 struck there was a fear in the industry and in Government that a pensions panic would hit, with mass pension withdrawals out of fear of stock market volatility and labour market uncertainty. So far, this concern couldn’t be more wrong. Instead customers have been holding off in large numbers.

“The pandemic is a harsh reminder of the uncertainty of how long your retirement might last, what it will look like and what it will cost. More than ever it has shown that when it comes to making decisions on your pension, you should get expert help.”

Quilter head of retirement policy, Jon Greer, added: “The figures show that pension savers paused for thought before cashing in their life savings during the crisis. The fact there was a slowdown in withdrawals is reassuring and shows that on the whole, savers recognised that cashing in their pension during a dip in the market was unlikely to serve them well.

Read more @Money Facts