The number of savers withdrawing all of their pension in one lump sum increased by 94 per cent between April and September 2020, data from the Association of British Insurers (ABI) has revealed.

Comparing statistics from the first coronavirus lockdown in April to when restrictions were eased in September, the ABI found that the number of people withdrawing just a tax-free lump sum also increased, by 55 per cent.

The total number of savers accessing their pension as a flexible income increased by 56 per cent, while the number of people buying an annuity increased by 41 per cent.

The ABI stated that the increases were due to “a combination of factors”, including savers returning to withdraw from their pension after pausing earlier in the year due to market volatility and some people needing the money after a change of circumstances.

Despite the increases, pension withdrawals of all types remained below the levels seen in 2019.

The number of people withdrawing all of their pension pot rose by 51 per cent during the same period in 2019.

“Government restrictions, stock market volatility and employment prospects are just some of the factors weighing on pension savers’ minds when considering taking money out of their pension pot,” commented ABI head of long-term savings, Rob Yuille.

“Everyone is different and it is important to find the right solution for your circumstances. Getting financial advice or guidance can help provide options and clarity on what to do with your savings.”

The Pensions Regulator (TPR) executive director of frontline regulation, Nicola Parish, said that the regulator was “concerned” that the impact of Covid-19 on people’s personal finances could result in “hasty decisions” about their pension pots that could damage their long-term interests and leave them vulnerable to scammers.

“Savers, do not transfer your pension now and regret it later,” she added. “Before any decision about your pot, visit The Pensions Advisory Service website for impartial guidance or get financial advice from a Financial Conduct Authority-authorised financial adviser.

“We also urge all providers, trustees and administrators to publicly commit to safeguarding savers by joining our campaign and pledging to combat pensions scams.”

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