A total of 516,000 payments were made out of pension pots between April 2015 and March 2016. However, in the last three months alone, this had accelerated to 1.5 million payments as 162,000 people took out £1.56bn from their pension plans.
Economic secretary to the Treasury, Simon Kirby, said the figures show that people continue to take advantage of the choices on offer and that the government’s free pension’s guidance service, Pension Wise had seen over 3.7 million visits to the website and over 100,000 appointments to date.
“The government is committed to making pensions fairer, safer and more accessible for consumers. This includes plans to cap early exit fees, allow earlier access to Pension Wise guidance, and work with industry to build a Pensions Dashboard prototype by April 2017.”
But Gareth James, pension expert at AJ Bell, said: “Whilst it is good to see that the pension freedoms are being utilised by a large number of people, it is dangerous to use the £9.2bn as a measure of success when it doesn’t tell us what people are doing with that money.
“Are they using it to provide a regular and sustainable income as pensions are designed to do, or are they spending it too quickly and likely to run out of money too quickly? It is important that the government carries out a more detailed analysis of how the pension freedoms are being used before any realistic assessment of their success can be made.”
Richard Parkin, head of pensions policy at Fidelity International said that the tax revenue is 50% above what official Government estimates originally anticipated.
However he also highlighted that these are just tax revenues brought forward and these numbers will fall in the future.
“The statistics released by HMRC today show that pension freedom continues to generate significant revenues for government. So far in this tax year, we have seen £500m more of payments made than in the whole of the last tax year which was also ahead of expectations. If the current rate of payments is maintained we’ll be looking at an increase of nearly 50% in the value of payments made to a whopping £6.4bn with a corresponding boost to tax revenues.
"Because HMRC don’t release details of tax-rates it’s difficult to assess exactly what the tax take will be but last year’s payments were estimated to have generated £200m more than the original budget policy costing which promised a £320m boost suggesting a net tax benefit of £520m for tax year 2015/16.
"If tax were payable at the same rate on this year’s payments then it seems the government could be looking at around £900m of additional tax revenue from the policy against their initial estimates for this tax year of around £600m so beating their policy costings by around 50%."