• Savers withdrew £2.3 billion from their pension pots flexibly in the third quarter of 2020, down 2% on the same three-month period last year (https://www.gov.uk/government/publications/flexible-payments-from-pensions/flexible-payments-from-pensions#october-2020-official-statistics)
• It is the second quarter in a row year-on-year withdrawals have dropped, following a 17% fall in Q2 2020
• However, the number of people accessing their pension flexibly has risen by 6% year-on-year to 347,000
• Investor behaviour slowly appears to be returning to historic norms – although the average amount withdrawn per-person fell 7% year-on-year to £6,700
Tom Selby, senior analyst at AJ Bell, comments: “The Coronavirus pandemic has presented a serious challenge to retirement income investors, with tanking markets in March and April placing severe strain on people’s pension plans.
“It was therefore reassuring that during the teeth of lockdown, when some investors experienced double-digit falls in the value of their portfolios, many chose to pause or reduce withdrawals in order to keep their retirement plans on track.
“With markets largely recovering as we moved into Q3 2020 behaviour has returned to something approaching historic norms, albeit with nerves still evident in the reduced average withdrawal amount.
“For those taking an income while staying invested in drawdown – and particularly people in the early years of retirement - it remains absolutely critical they stay engaged and are prepared to adjust withdrawals if markets fall again in order to stay on a sustainable path.
“Ploughing on regardless is a highly risky strategy and could result in you running out of money early.”
