Nineteen per cent of people have withdrawn cash from their pension due to concerns over regulations changing, it has been reported.

New research from Retirement Advantage on the reasons for increasing cash withdrawals from defined contribution pensions has found that almost one in five people are reluctant to leave their money in their pension pot as a result of possible regulation changes. A further 43 per cent of those polled said they have used the freedoms to take cash, as they would like to have a bit extra to spend; 36 per cent said they needed the money.

According to data from HMRC, £6.54bn was withdrawn in taxable cash payments from pensions last year, up almost £1bn on £5.69bn withdrawn in 2016.

Of the multiple reasons pension holders could choose from, 29 per cent put the money into a savings account and 25 per cent used the money for home improvements, Retirement Advantage said.

Six per cent said they had used some of the cash to help family members onto the property ladder and only 8 per cent and 2 per cent gave a monetary gift to their children and grandchildren, respectively.

Other reasons included to pay off mortgages and non-mortgage debt, to pay themselves a regular income and cash used to go on holiday or buy a new car.

Retirement Advantage pensions technical director Andrew Tully commented: “A picture is emerging of significant taxable cash sums being withdrawn under the pension freedom rules, driven by desire and necessity.

“More worrying is the significant number of people telling us they are taking the cash because of a concern that the regulations will change in the future. Taking money out of a tax advantaged pensions environment to put the money in a savings account is rarely a great idea. But I can understand why people are concerned about moving goal-posts as pensions have been a political football for many years."

Tully noted that the pension freedoms are “clearly popular with customers” as more people seek flexibility with their retirement income, with increasing numbers accessing their pension before their retirement age.

“However, with freedom and choice comes a whole new level of complexity to catch out the unwary. Cash is king, and government coffers continue to benefit from the additional up-front tax take. More people are going it alone with DIY drawdown, rather than seek professional financial advice, while scammers and conmen continue to prey on the market,” Tully added.

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