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Financial planning issue as people look to draw pension early

17 December 2019

People in the UK face a financial planning hurdle, with the average worker intending to access their private pension before retiring from work and reaching the state pension age, Canada Life has warned.

New research from the retirement specialist revealed that on average, the majority of people plan to access their pension at age 62, with only the over-55s expecting to wait until they are 63 to access their savings.

People between the ages of 18 and 54 plan to retire at 63 years of age, one year after accessing their pension. However, those who are already 55 expect to continue working until they reach 67.

Andrew Tully, technical director, Canada Life, said the expectation of drawing down a pension and stopping work several years before their expected state pension age means people will need to think more carefully about how to fund their retirement.

He said: “People need to take positive steps early to mind the pension’s gap. Whether that be saving more, moderating their ambitions or considering working longer.

“Product choice can also play a role as a solution which ensures flexibility, for example a lower income while working, increasing as you move towards state pension and then dropping again can prove beneficial from a tax planning perspective.

“As people approach retirement, it’s clear from our research the financial reality kicks in.”

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