The latest figures on retirement income from the Financial Conduct Authority (FCA) raise concerns about the long-term sustainability of pension payments, according to Just Group group communications director Stephen Lowe.
The figures, released on Tuesday (29 September), showed a 3.3% rise in the number of pensions being accessed for the first time and a 5.1% rise in the number being fully withdrawn.
Of the 673,831 pensions accessed in 2019/20, more than half (56%) were fully withdrawn, up slightly from 55% in the previous 12 months. With that said, those with pension pots worth less than £10,000 were significantly more likely than any other value category to withdraw their entire pension.
Figures relating to those taking more than 8% of their pension per year were on the up by 2%. Taking more than 8% per year was a particularly popular strategy for those with a pension worth £30,000 to £100,000, where more than half (51%) were taking more than 8% compared to 28% of those with pension valued at more than £100,000.
According to Lowe, most experts agree that level an 8% withdrawal level is highly likely to end up exhausting the fund early in people's remaining lifetimes.
"Today's figures show more pension funds are being accessed, a high proportion are being fully encashed and those who are taking income are taking higher amounts," he said.
"Of those pots going into the relative complexity of drawdown, 27% were moved without advice or guidance which is higher than the 25% previously."
Source: The FCA
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4% withdrawal rule of thumb
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Liquidation fees have risen to over £15m
The Great British Sustainable Savers Census 2020