The introduction of the freedoms in 2015 allow anyone aged 55 and over to withdraw their pension as a lump sum, tax free on the first 25% and the remainder taxed at their income tax rate.

The figures from the ‘flexible payments from pensions’ section in the HMRC’s latest Pension Freedoms’ report revealed that in Q4 2017 some 200,000 individuals withdrew money flexibly from their pension pot and around £1.5 billion was withdrawn.

Data also showed that the quarterly rate of withdrawal has been between £1.5 billion and £1.6 billion in five of the last six quarters. A total of £15.7 billion has been withdrawn since the freedoms were introduced in April 2015.

Steve Webb, director of policy at Royal London, said: ‘These new figures show that withdrawals under pension freedoms are now settling down to a steady level. Roughly 200,000 people are using the freedoms each quarter and are withdrawing a steady £1.5 billion per quarter.

“This is very much the new normal and suggests that a significant number of those at or in retirement continue to value the flexibility given by the new legislation.   However, it remains important that individuals take expert advice to make sure that the withdrawals from their pension fund are sustainable in the long-term”.

However, Andrew Tully, pensions technical director at Retirement Advantage forecast withdrawals would not slow down any time soon.

He said: “The dash for cash shows no signs of slowing as significant sums continue to be withdrawn from pensions. A trend is emerging of pension pots being withdrawn fully, but there is insufficient information to tell us why. It could be that people are reacting to uncertainties in the economic environment, or are simply worried about the legislative goalposts changing again, or they might just want their money.

“The freedoms have certainly generated a welcome windfall for the Treasury but it’s clear tax has not been the natural brake to prevent people withdrawing large sums before retirement.”

He added: “We know people are accessing their pensions for the first time at younger ages, certainly before they are due to retire. And from our research we know they are spending the cash on making home improvements, going on holidays, paying off debts and also saving the money outside of the pension.”