A total of £1.86bn has been cashed in from pensions in Q2 2017, the highest quarterly withdrawal recorded since the introduction of the pension freedoms, HMRC has revealed.

According to HMRC's Flexible Payments from Pensions: July 2017 report, a total of £12.7bn has been flexibly withdrawn from pensions since the freedom and choice reform was introduced in April 2015.

In the second quarter of 2017, 200,000 individuals withdrew cash from their pensions, the highest total to date.

The report highlights that the number of people that took cash flexibly from their pensions increased gradually, from 159,000 in Q2 2016, 162,000 in Q4 2016, 176,000 in Q1 2017 and a larger jump of 24,000 people to 200,000 in Q2 this year, and five per cent more than the same quarter last year.

While the number of people withdrawing from their pension has increased, average withdrawals year-on-year fell from £11,132 in Q2 2016 to £9.300 in Q2 2017.

In the April to June 2017 period, the average value of payments made was £1.86bn, up from £1.59bn the previous quarter.

Royal London director of policy Steve Webb said: "These figures show that more and more people every quarter are taking advantage of the new pension freedoms. From under 100,000 in the second quarter of 2015, the number has more than doubled in two years. Any future government would find it politically impossible to reverse this policy which is now a significant part of the retirement planning of large numbers of people. The priority for regulators must be to ensure that people are given the right guidance and advice to make best use of these freedoms."

AJ Bell senior analyst Tom Selby commented: “The pension freedoms continue to be hugely popular, with evidence suggesting most people are accessing their retirement pot in a sensible way rather than ravaging their savings to splurge on fast cars.

“While the evidence so far is encouraging, the FCA will need to keep a close eye on the market to ensure consumers continue to manage their withdrawals in a sensible, sustainable manner.”

Just group communications director Stephen Lowe added: “In its recent Retirement Outcomes Review interim report, the FCA said taking pension money early has become the ‘new norm’ with nearly three-quarters of pots accessed by people under 65, most of whom took lump sums.

“We still lack evidence to know whether this level of withdrawal is healthy or should be worrying. The FCA’s research found many people who thought they were doing the right thing by taking pension money had a ‘penny drop’ moment and questioned their decision when confronted with facts about life expectancy and the size of fund needed to deliver even a basic retirement income."

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