Pension freedom withdrawals now at 25.6bn: We ask “Is this always the most appropriate course of action for SME owners?”

Savers have accessed £25.6 billion from their pots since the launch of pension freedoms, it has been revealed.
The latest figures from HMRC show 539,000 people withdrew a total of £8.2 billion in the latest financial year.

What is not in doubt is the appetite for people to take advantage of the freedoms, launched in 2015, shows no sign of diminishing, although as Pension-led funding Chairman Adam Tavener pointed out, the “stampede” to dip into pots or a rush to buy a Lamborghini never materialised.
Adam said: “Whilst £25 billion plus is a huge amount of money it should be seen in the context of the value of private pensions in the UK as a whole, which now exceeds £2.5 trillion.
“A few points arise from this. The first, and most obvious one, is that the much feared stampede of individuals withdrawing their entire pension pots to fund unwise purchases just hasn’t happened, thus, notwithstanding Steve Webb’s comments when he was pensions minister, there must be quite a few disappointed Lamborghini salesmen out there.
“On a more serious note what does concern us is the continuing lack of awareness in the SME owning community, who undoubtedly make up a fair chunk of this overall population. If their aim in taking withdrawals under pension freedoms is to provide extra funding for their businesses, undoubtedly the case in many instances, failing to seek advice on the other options open to them, such as Pension-led funding, can lead to a significant erosion of benefits at a later date.
“Clearly the total number of withdrawals under the ‘Freedom’ rules will increase steadily as more individuals hit the age 55 hurdle but the reducing transaction values speak of an orderly process overall.
“As I mentioned earlier, there is much work to do around how SME owners engage with these rules, as a priority in reality, but that aside this would seem to have been a popular and successful initiative.”
Clifton Asset Management recently conducted research on an alternative to accessing pension pots using pension freedoms, our conclusion being that there is a £250 billion pot of money waiting to be invested in the UK’s two million small businesses with owners over the age of 50.
For more details regarding our analysis and how we can help unlock these funds please click here
Source date HMRC release

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