Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what assessment Her Majesty’s Government has made of the long-term effect on retirement incomes of people withdrawing money from their pension pots and placing it in bank current accounts and low-interest savings products.

The government continues to assess its reforms, and keeps policy under review through the annual budget process, using data collected from a number of sources.

The Financial Conduct Authority (FCA) is responsible for monitoring the retirement market and collects data from the markets it regulates, consumer surveys and its own operations. The FCA’s Retirement Outcomes Review has examined how the retirement income market is evolving since the introduction of pensions freedoms. The government awaits the final report of the Retirement Outcomes Review and will work with the regulator and industry to consider its recommendations.

The impact of pensions flexibility on tax revenue was costed in the Office for Budget Responsibility’s March 2014 Economic and Fiscal Outlook. HMRC publishes a quarterly statistical release detailing the number of transactions using pension flexibility and the amount of money withdrawn.

The government has made freedom and choice in pensions a key priority, meaning individuals are now free to access their pensions as they wish. The government set up the free and impartial Pension Wise service to provide guidance to individuals over 50 with a defined contribution pension, to help them understand their options. The government is creating a new single financial guidance body.

This will make it easier for people to access information and guidance about their pensions. In making such decisions, individuals need to consider the impact of different options and subsequent income tax implications on their retirement income.