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Pension freedoms used by 230,000 in first year, says Treasury

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More than 230,000 people have taken money out of their pension pots since new rules were introduced just over a year ago, according to the Treasury.

The figures include those who are taking flexible incomes from their savings, and buying annuities.

However, the numbers appear to be lower than previous estimates by the Financial Conduct Authority (FCA).

It reported that 179,000 people took money from their pensions in the third quarter of 2015 alone.

This may be because of under-reporting to HM Revenue and Customs (HMRC).

Until this month it was not compulsory for pension funds to tell HMRC when cash was being withdrawn.

As a result, the Treasury admitted that its figures were "not comprehensive".

'Choice'

Under the government's flagship pension freedoms, introduced in April 2015, anyone over the age of 55 can take money out of their pension pots, subject only to income tax.

Previously they would have had to pay a 55% tax charge.

The Treasury figures suggest 232,000 people took £4.3bn from their pension pots since the rules changed.

In the first three months of 2016 74,000 people withdrew £820m.

Originally fears were expressed that too many people would cash in their pension pots, leaving them without an income in retirement.

But the FCA has reported that most people are using the money to buy themselves an income, and most pots being cashed in are small.

"It's only right that people should have a choice over what they do with their money and in their first year our successful pension freedoms have already given thousands of people access and responsibility over their hard-earned savings," said Harriett Baldwin, the economic secretary to the Treasury.

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