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Old Mutual Wealth comments on pension freedom

25/01/2017

Following figures released by the HMRC today on the number of people taking pensions flexibly, please find a comment from Jon Greer, pensions expert at Old Mutual Wealth

Jon Greer

“Today the Government has announced that those accessing pensions freedoms has hit an all-time high of 162,000 people for the final quarter of 2016. 

“On closer inspection, the data reveals that people are getting to grips with the freedoms. They are withdrawing less per payment and increasing the frequency of how many withdrawals they make. We expect these trends to continue with withdrawal sizes per payment continuing to fall and the frequency of withdrawals by individuals continuing to increase. [see table below].

“Pensions freedoms are likely to become more  popular as time goes on, but other government policies seems to be putting barriers in way of its progress.

“In the Autumn Statement, Philip Hammond announced the intention to reduce the Money Purchase Annual Allowance from £10,000 to £4,000.  The rule change was targeted at the potential to recycle pension savings to reduce tax. However it is the antithesis of flexibility. Increasingly 50-75 year olds are using temporary and flexible work as a way to fund their retirement. Our YouGov research* with UK adults aged 50-75 found that 30% expect a job to help fund their future retirement income needs. These people may need to access their pension flexibly, but may also look to contribute into the pension in periods when alternative income is higher, thereby sustaining their long term pension provision. If they pay in more than the Money Purchase Annual Allowance they will be subject to a tax charge on the excess that broadly negates the tax advantage given when the contribution was made.

“Pension freedoms acknowledge that people have different financial needs and there are different versions of retirement.  However, this is at odds with the universal state pension age. John Cridland recently raised the possibility of replacing the universal state page with something more tailored for people’s need in his interim report on the state pension age published last year. This is a line of inquiry that will no doubt continue to be pursued.” 

  

Year

Quarter

No. of Payments

No. of individuals

Total value of payments

Average value per payment

Av no. of payments per individual

Av value paid to individuals

2015

Q2

121,000

84,000

1,560,000,000

12,893

1.440

18,571

2015

Q3

130,000

81,000

1,170,000,000

9,000

1.605

14,444

2015

Q4

123,000

67,000

800,000,000

6,504

1.836

11,940

2016

Q1

142,000

74,000

820,000,000

5,775

1.919

11,081

2016

Q2

296,000

159,000

1,770,000,000

5,980

1.862

11,132

2016

Q3

324,000

158,000

1,540,000,000

4,753

2.051

9,747

2016

Q4

393,000

162,000

1,560,000,000

3,969

2.426

9,630

For more information contact

Kathleen Gallagher
Old Mutual Wealth
023 8072 6293
07990 004932
kathleen.gallagher@omwealth.com

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• Private Client Advisers to Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.