The number of employees making pension withdrawals as a flexible form of income decreased by 42% during April 2020, in comparison to April 2019, according to research by the Association of British Insurers (ABI).
The research found that in April 2019, compared to April 2020, queries from customers about their pensions fell by 32%. The number of employees taking only a tax-free lump sum has also decreased by over half (53%). Additionally, the number of those withdrawing all of their pension in one lump sum has fallen by 30%, while employees buying a guaranteed income for life has fallen by more than half (56%).
When comparing March 2019 to March 2020, queries from customers about pensions fell by 3%, people choosing to access their pension as a flexible income fell by 15%, members taking a tax-free lump sum fell by 29%, and those withdrawing pensions in a lump sum decreased by a fifth (20%). Additionally, the number of members buying a guaranteed income for life has decreased by over a third (36%).
Rob Yuille, assistant director, head of long-term savings at the ABI, said: "As Covid-19 (Coronavirus) struck there was a fear in the industry and in government that a pensions panic would hit, with mass pension withdrawals out of fear of stock market volatility and labour market uncertainty. So far, this concern couldn’t be more wrong. Instead, customers have been holding off in large numbers.
"The Coronavirus pandemic is a harsh reminder of the uncertainty of how long retirement might last, what it will look like and what it will cost. More than ever it has shown that when it comes to making decisions on your pension, you should get expert help.”