"Having what looks like a large pool of cash at hand can be a temptation for people focused on the short-term."
- Stephen Lowe, group communications director at Just Group
Seven in 10 people taking flexible payments from pensions are below age 65, raising questions about whether retirees are taking ‘too much, too soon’.
Figures released today by the Department for Work and Pensions show that 2.6 million people have so far taken a flexible payment from a pension and 43% of them were aged under 60 and a further 28% aged 60-64.
Of the £83 billion taken in flexible payments since inception in 2015, nearly two-thirds (65%) has been taken by those aged under 65. The figures do not include those who have only taken tax-free cash.
The DWP figures show the balance of those taking flexible payments before they reach age 60. Since 2015, 43% or 1.1 million of the 2.6 million who have taken a flexible payment were aged 59 or under, collectively withdrawing 36% of all flexible payments worth more than £30 billion.
In contrast, those aged 65+ made up only 20% of individuals withdrawing and 21% of the cash withdrawn.
Stephen Lowe, group communications director at Just Group, commented: “Money taken from pensions early is obviously not going to be available when people are older. These figures show that early access to pensions is very common, usually long before State Pension age.
“Most people need to manage their pension withdrawals very carefully to ensure they don’t run out and these figures do not inspire confidence that is happening.
“Giving people access to pension money at age 55 gives them more flexibility, for example, to deal with periods out of the job market due to redundancy or illness. But having what looks like a large pool of cash at hand can be a temptation for people focused on the short-term."
