Approximately £7.65bn has been withdrawn since the launch of the pension freedoms in April 2015, HM Revenue and Customs has reported.

HMRC figures show that 1.1 million payments have been made since the introduction of the freedoms, with 158,000 accessing £1.5bn flexibly in the third quarter this year.

Nonetheless, compulsory reporting was only introduced in April this year, therefore the true results are not completely clear 18 months on from the introduction of reforms.

Research from the Association of British Insurers found that the majority of pension savers are utilising the freedoms well and are making sustainable long-term decisions.

Industry data also shows a significant shift from annuities, as the default retirement income option, to drawdown and ad-hoc withdrawals.

People taking advantage of the freedoms have benefited from the government’s free pensions guidance service Pension Wise, which has had over 3 million website visits and close to 90,000 appointments to date.

The Treasury’s economic secretary Simon Kirby said: “Today’s figures prove that allowing people to do what they with their hard-earned savings, whether it’s buying an annuity or taking a cash lump sum, is the right thing to do.

“The freedoms remain a popular choice as people consider the different ways to fund their retirement. “

AJ Bell senior analyst Tom Selby said: “These figures show that people are embracing the pension freedoms and flexible withdrawals have now become the default option for income in retirement. It is interesting that the average withdrawal per person has gradually reduced since the launch of the freedoms (see chart below), suggesting the initial dash for cash has tailed off and people are becoming more realistic about a sensible withdrawal level over time.

“However, an average withdrawal rate of £10,000 per person in a quarter still feels high in relation to the average pension fund size of around £40,000 in the UK. This shows the limitations of this data. To get a full picture of how successful the pension freedoms are it would be good to see what these withdrawals are being used for and to have some sense of how much people have remaining invested in pensions."

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