Pension freedoms have resulted in a total of £30bn being withdrawn from pensions in the past four years, although the average amount that savers are withdrawing has dropped 5 per cent in the past year.

Pension freedom rules mean those aged over 55 no longer have to purchase an annuity to access their pension income but can instead enter drawdown or take a cash amount.

Data published by HM Revenue & Customs today showed in total, more than £30bn has been withdrawn from schemes since the introduction of the freedoms in April 2015.

While the overall amount being withdrawn from pensions has grown year-on-year, it was down slightly in the third quarter compared with the previous quarter.

In the third quarter, £2.4bn was withdrawn from pensions flexibly, a 21 per cent increase from the £2bn withdrawn in the same period last year but down on the £2.75bn taken out of pensions in the second quarter of 2019.

The data also showed the average amount withdrawn per individual from their pensions flexibly in the third quarter of 2019 was £7,250, down from £7,600 in the same period last year and a fall of 12 per cent from the last quarter.

HMRC said average withdrawals have been falling steadily and consistently, with peaks in the second quarter of each year because people were phasing their withdrawals to minimise the amount of tax they have to pay.

The average withdrawal tends to be higher after the start of a new tax year as that is when individuals tend to plan their withdrawals.

Meanwhile, 327,000 individual withdrawals were made from pensions in the third quarter, a 27 per cent increase on the 258,000 in the same quarter last year but a 3 per cent decrease from the 336,000 individual withdrawals in the second quarter of 2019.

Sir Steve Webb, former pensions minister now director of policy at Royal London, said: “Pension freedoms have been hugely popular and allow hundreds of thousands of people every quarter to draw on their pension savings in a flexible way.

“There is also evidence that people are being savvy about the timing of their withdrawals, spreading them over more than one tax year to reduce their overall tax bill.

“But it remains the case that we need to increase the proportion of people who take financial advice or guidance before making decisions about how much of their pension to withdraw.”

If you would like to discuss your pension provision with an adviser, please contact us on 0191 384 1008.