Drawdown cash withdrawals are set to increase significantly in the build up to the end of the 2018/19 tax year, according to analysis from Hargreaves Lansdown.

It found that the average income taken out of pension pots increased, on average, by 28 per cent in March and 40 per cent in April.

Additionally, 15 per cent of all pension cash outs during the year occurred in March, as savers prepared for the end of the tax year in early April.

The high proportion of savers accessing their pension funds in March and April showed that most people “are managing their money sensibly and are actively minimising their tax liabilities”, according to Hargreaves Lansdown senior analyst, Nathan Long.

He continued: “Rather than pulling money out irrespective of timing and tax implications, it seems many DIY pension savers are actually carefully managing their income according to their tax allowances.

“The Financial Conduct Authority and the government are introducing valuable measures to further simplify the process of navigating retirement but in the meantime this is welcome evidence many people are perfectly able to manage their own affairs.”

Hargreaves Lansdown also found that 44 per cent of ‘DIY investors’ have only moved part of their pension savings into drawdown, which further showed that savers are managing their money effectively as it allows only enough tax free cash to be taken.

Long concluded: “Drawing from your pension investments is a riskier business than buying the guaranteed income of an annuity.

“Aim to hold at least one years’ worth of income as cash if you are using drawdown so you are not forced into selling your pension investments at a low point if the market falls.”

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