Data from the Association of British Insurers (ABI) shows that despite the number of people accessing their pension as a flexible income increasing by 56% between April and September this year, the number of withdrawals of all types from pension pots still remained below 2019 levels.

The ABI found that whilst some held off from withdrawing money at the start of the year due to stock market volatility, “a combination of factors” - such as a change in circumstance - had led to savers returning to withdraw from their pensions.

During the period April to September 2020, the number of people withdrawing all of their pension pot rose by a huge 94%, compared to 51 per cent during the same period in 2019.

Additionally, this year number of people taking only a tax-free lump sum has increased by 55% and those buying a guaranteed income for life (annuity) increased by 41%.

Having said that, many savers are still resisting the urge to dip into their pension pots in the face of financial uncertainty brought about by the pandemic.

Rob Yuille, Head of Long-Term Savings at the ABI stated:

“Government restrictions, stock market volatility and employment prospects are just some of the factors weighing on pension savers’ minds when considering taking money out of their pension pot. Everyone is different and it is important to find the right solution for your circumstances. Getting financial advice or guidance can help provide options and clarity on what to do with your savings.”

He added:

“We welcome the Money and Pensions Service confirming that they will develop a later life checklist for over-50s, especially those facing redundancy or income reductions in light of Covid-19.”