Accessing pensions early is one effect of the cost-of-living crisis as more than half of UK adults to look at ways to boost their income , new research from Canada Life has found.
According to Canada Life, 55% of UK adults, equating to 28.9 million people, have implemented or are looking at ways to increase their income. More than a third (36%) are selling unwanted items, while 28% are looking for a better paid job and 23% are looking for a second job.
Over a fifth (22%) of adults have, or plan to use, their savings and investments to supplement their income, and 13% are turning to their pension savings earlier than planned. A further one in ten (10%) are considering accessing equity in their home.
In addition, 13% have, or are planning to take out or increase, their use of credit cards and nearly one in ten (9%) have or are planning to take out or increase their overdraft.
The sharp rise in the cost of living has also spurred 69% of people to become thriftier and watch their money and 65% said to shop around for the best deals more than they used to.
Andrew Tully, technical director at Canada Life, said: “The cost of living crisis is causing the majority of people to re-evaluate their financial situation. And, with inflation set to reach double-digits later this year, we can expect to see more individuals tightening their belts and looking for additional ways to supplement their income.
“However, with the research showing that over one in 10 adults are looking to access their pension early, we, as an industry, need to ensure that these individuals are aware of the tax and cost implications of doing so. Not only will your pension have to stretch further into the future, you are likely to pay tax and you can also trigger the Money Purchase Annual Allowance.”
Tully warned people need to be aware of the use of emergency tax on initial withdrawals, which could result in them receiving less than they were anticipating.
Tully added: “While it’s hard to predict how long inflation will remain high, it’s vital that we encourage people to look beyond the here and now and look at their finances over the medium to long-term. For those concerned about their financial future, speaking to a financial adviser is a sensible step.”
