One Billion Pension Fund Withdrawals Since April

One Billion Pension Fund Withdrawals Since April.

The Chancellor, George Osborne, confirmed during questions in Parliament yesterday that approximately £1 billion has been withdrawn by savers using the new flexible pensions drawdown facilities since they began on April 6th this year.

Under new flexible pension rules, people can withdraw as much or as little as they want from their pension fund, provided it offers the flexibility to do, from age 55.  The Chancellor also suggested that around 60,000 pension savers had used the option to access their funds.

Given the way the government are taxing this, with 25% as the usual tax free lump sum and the balance taxable as income, but not just taxed initial as income but on a week 1/month 1 basis (watch week1/month1 videos below), meaning more tax is paid today and you will need to reclaim excess tax, this represents a huge tax take for HMRC in the first two months or so.

Multiply those figures by the coming months and years, you get an idea of the clever way the government are collecting tax for cash flow purposes as well as money flooding into the economy.  You can perhaps understand now why the Government, via Iain Duncan Smith, has confirmed that they are going to name and shame all pension companies that do not offer flexible pension access.

It’s all about the tax!  We worry for the future with people running out of money and more moving onto benefits in later life.