One pension expert has warned UK households over the things to keep in mind if you’re part of the majority accessing pension funds before hitting Department for Work and Pensions (DWP) state pension age.
State pensioners warned bank accounts could be drained over ‘age 55’ rule
As many as 70 per cent of under-65s are “risking” their retirement with an early pension pot mistake. One pension expert has warned UK households over the things to keep in mind if you’re part of the majority accessing pension funds before hitting Department for Work and Pensions (DWP) state pension age.
Lisa Picardo, Chief Business Officer UK at Pension Bee, warned that accessing a pension early could easily see people “draining their pension pot before they reach retirement”.
In 2015, the pension freedom rule change allowed people to access their pension from the age of 55. Lisa told Express: “The key is planning ahead and withdrawing sustainably.
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“Work out how much you might need each year from your personal pension in addition to what’s available from your State Pension, factor in inflation and tax, and consider leaving as much as possible invested to keep growing.
“Even small adjustments to how much and how often you withdraw can make a big difference to your future income in later life.
“Most importantly, remember your pension needs to last a lifetime. It needs to be there to support you for the whole of your retirement, not just the early years, so pacing yourself can help you enjoy the journey without running out of fuel.”
The pension expert explained: “Rather than people raiding their pots the moment they turn 55, we’re seeing more sensible behaviour, and people are waiting until they’re genuinely approaching, or are in retirement, before making significant withdrawals.
“This may be reflective of longer working lives, delayed retirements and increased longevity.
“Back in 2016, people in their late fifties were the biggest users, taking 42% of all taxable withdrawals, followed by 28% in their early 60s, and 30% in the over 65 age category.
“Now the 55-59 group has dropped to just 26%, with a stable 28% in their early 60s, and 46% of taxable withdrawals from the over 65s.”