State pensioners rush to withdraw cash from accounts due to 2015 rule change

Around £65billion has been withdrawn by those below state pension age, figures show.

Millions are draining retirement pots before their Department for Work and Pensions (DWP) state pension age as living costs soar. Around £65billion has been withdrawn by those below state pension age, figures show.

Three in four pension savers accessing flexible withdrawals are doing so before reaching 65, according to DWP figures. 71 per cent of the three million people who have made flexible withdrawals since pension freedom rules were introduced in 2015 were under 65.

DWP data reveals that 43 per cent of flexible pension payments went to individuals under 60, while another 28 per cent were made to those aged between 60 and 64. Stephen Lowe, group communications director at Just Group, said: “Perhaps if the FCA had called it an ‘epidemic’ it might be viewed in a different light and more steps taken to understand the consequences.”

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He warned: “Ultimately pensions are primarily to provide retirement income and that money won’t be available in old age if people are using it to subsidise their lifestyle long before retirement.”

Significant gaps exist in understanding the full scale of early pension access, according to Lowe, who described this as “a massive blind spot in our knowledge”.

“We don’t know how much tax-free cash is being taken. We don’t know why people are accessing pensions early or what they are doing with the money,” he explained.

“We can’t tell how many accessing cash early are doing it for savvy financial planning reasons compared to how many are taking unsustainable amounts that will likely leave them short in the future,” Lowe said.

Responding to the figures, one said: “There’s no incentive to be self sufficient any more. Just spend the lot then live off the state – just like all the illegals who’ve contributed absolutely zero.

“This is also the result of Labour’s policy of including pension pots as part of your estate so one’s children are hit with a 40% tax bill. This is what happens when you put politicians in charge of a country’s finances who have no business acumin whatsoever.

” Dumb doesn’t even come close to describing the present shambles governing us.”

“Perhaps they are stashing it elsewhere with a view to leaving the country? Or do they fear it will have disappeared by the time they retire?” another asked.

“It’s more likely people are spending their pension pots to prevent the government getting their hands on them!,” another commented.