On 6 April, the new pension freedoms gave many individuals unprecedented access to the pension funds they had been building up during their working lives, including the right to take out cash lump sums. According to its research, the ABI says:

• Interest in the reforms resulted in an 80% increase in calls to pension providers in the first month.
• In the first 3 months, providers paid out almost £2.5bn in cash and income drawdown payments.
• Around 60% of all cash lump sums paid out in the first three months went to people younger than 60, and around 80% to under 65s.
• For the same period, only 42% of income drawdown payments went to the under 65s.
• In 95% of cases where savers accessed a cash lump sum, they withdrew the entire fund.
• The amount of pension freedom cash withdrawn in the first three months represents less than 1% of all pension funds held by over 55s.

Yvonne Braun, director of Long-Term Savings Policy at the ABI, said: “These figures show that tens of thousands of people have used the new pension freedoms so far to access money they have saved.

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“There’s been a lot of activity involving the under 65s, who account for more than 4 in every 5 cash lump sum withdrawals, but the majority of people have only been cashing in relatively small pots which account for a tiny proportion of all the money which could have been released. This shows that on the whole the British public are taking a sensible approach.

She added that the changes which came into effect on 6 April had revolutionised the world of retirement savings but “now the country needs to ensure as many people as possible can make the most of them.”

She said that giving individuals greater power over their pension pots should encourage more people to put money aside for their retirement. Another goal must be to use the tax relief system to better incentivise saving, she added. The ABI has proposed a simple ‘Savers’ Bonus’ for everyone paying into a pension in a response to government consultation on pension tax relief.