Pension freedoms – a promising start?

We look at the recent FCA report on the way in which the new pensions freedoms are being accessed by some scheme members.

The FCA has published a report setting out data and analysis in relation to a number of areas across the pensions and retirement income market, including consumer access to the pension freedoms introduced in April 2015.

The pension freedoms seek to broaden options for certain pension scheme members on retirement. Relevant members can now choose between cash, an annuity or drawdown in the form of flexi-access drawdown or uncrystallised funds pension lump sums.

The FCA report reveals some interesting data on how these freedoms have been used by members in the first three months following their introduction:

  • More than 200,000 pension polices were accessed in that three month period, compared with just over 95,000 during the same period in 2013 – one year before the reforms were announced.
  • 57,568 members have fully cashed in their pension fund as an uncrystallised funds pension lump sum. Of these members, the majority – 47,331 – cashed in pots worth less than £30,000. 137 people withdrew £250,000 or more.
  • Almost 17,000 members withdrew the maximum tax free lump sum only.
  • Annuity sales fell to just over 12,000 (down from just under 90,000 for the same period in 2013).
  • 84% of consumers (just over 3.4 million people) who are eligible to access their pension savings would not face an exit charge. However, of the remaining consumers, 358,000 (around 9%) aged 55 or over would face an exit charge of 0%-2%, 165,000 (4%) would be charged 2%-5% and 147,000 (around 3%) would face a charge greater than 5%.

The report also provides information on financial advice requirements and pension transfer procedures in general.

We will continue to monitor how members are accessing their funds using the new freedoms and how this impacts the sector. If you have any questions or would like more information, please contact one of our pension specialists below.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Colin Greig


I am a Partner specialising in pensions law.

Tim Green

Partner - Head of Pensions

I am a Partner in the Pensions team with a broad advisory, transactional and dispute resolution practice.