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Law360, London (November 2, 2020, 1:58 PM GMT ) The amount of money withdrawn from pension plans between July and September fell by £100 million ($129 million), an indication of consumer caution brought about by the COVID-19 pandemic, analysts commenting on HM Revenue and Customs statistics have said.
Money withdrawn in the third quarter of this year fell to £2.3 billion, marking a 2% drop from the £2.4 billion that retirement savers took out in the same period in 2019, the tax authority said.
The virus presented "a serious challenge" to retirement income investors, and their pension plans also came under "serious strain," according to Tom Selby, senior analyst at AJ Bell, an investment consultancy.
"It was therefore reassuring that during the teeth of lockdown, when some investors experienced double-digit falls in the value of their portfolios, many chose to pause or reduce withdrawals in order to keep their retirement plans on track," Selby said on Friday.
Selby added that behavior is returning to something approaching the historical norm with the move into the third quarter of this year.
Figures from HMRC also show that the number of people making withdrawals increased during the third quarter of this year, in contrast with the typical peal for withdrawals in the second quarter before dropping again in the third. The tax authority also said that his may be attributed to the impact of the COVID-19 outbreak.
Some 347,000 people withdrew from their pensions between July and September — a 6% rise from 327,000 during the same months in 2019.
The virus has affected consumers and businesses across the county since the initial lockdown was announced in March.
The parliamentary undersecretary for Work and Pensions, Guy Opperman, said in July that the department is working to collect data to understand the impact of the virus crisis on pensions savings.
The COVID-19 era has also raised concerns about financial crime. It emerged in September that just over half the pension transfers that took place during the pandemic could be suspicious, according to evidence submitted to a parliamentary inquiry.
--Additional reporting by Lucia Osborne-Crowley and Martin Croucher. Editing by Ed Harris.
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