Pension-pot freedoms fail to create a rush for fast cars

PENSION freedom fears are unfounded as analysis shows people are not cashing out to buy Lamborghinis, according to Royal London.

The insurer looked at data from more than 17,000 customers supported by financial advice to see how they were handling their drawdown pots in retirement.

More than a third were taking out between three and six per cent per year, seen as a broadly sustainable amount.

The pension freedoms were introduced in 2015 to give the over-55s more choice over how they use their pension pots. Royal London’s analysis looked at customers whose adviser was using the firm’s drawdown governance service, which provides advisers with quarterly assessments on how sustainably people are using their pension pots.

Sir Steve Webb, a former pensions minister who is now director of policy at Royal London, claimed as a minister that people should be trusted with their pension pots, and was “relaxed” about the possibility of people spending their savings on a Lamborghini.

He said: “Our data shows current withdrawal rates for those taking advice are typically in low single [percentage] figures – there is no sign of Lamborghinis. The data suggests that for advised customers there is little reason for concern that pension freedoms are being used irresponsibly.”