Significant numbers of retirees are choosing to access their pensions while still working because they need an income boost, new research from Just Group has found.
Nearly three in 10 (28%) over-55s said that they had withdrawn money from their pension before they retired. Almost a third (32%) of this group said they needed the income to bridge the gap to State Pension age or because of redundancy or lower earnings and more than half (52%) said they had retired sooner than they had expected.
Stephen Lowe, group communications director at Just Group, said: “It seems that accessing pensions before retiring from full-time work is helping significant numbers of people cope with rising day-to-day living costs and sudden or unexpected events. Whether taking pension money before retiring is a good or bad decision depends on people’s individual circumstances but it’s important to remember that pension money taken and spent before retirement will not be available to provide income later in life.”
Lowe said people should check whether State Benefits might be available to provide extra income and if someone does decide to make lump sum withdrawals from their pension then they should work out how to do that in the most tax-efficient way.
Lowe added: “When times are tough the pension pot can look like an easy solution to an immediate problem but it’s important that isn’t the default solution. People may well have other options and it’s important they’re fully aware of all the choices available to them and that they understand how decisions made now are likely to impact their lives 10, 20 or 30 years down the line.
“We would urge all those considering their pension options to take advantage of the government’s free, independent and impartial guidance service Pension Wise.”
