More than one million pension pots have been dipped into since the pension freedoms were introduced in April 2015.
Savers aren’t raiding funds to buy fast cars, but there are huge concerns that they’re panicking and taking cash too early.
The Financial Conduct Authority’s latest market review reveals that almost three-quarters of pots were accessed by under-65s – and more than half were totally emptied.
Confusion over the complex changes and a distrust of the pensions industry means that more than half of the cash taken was transferred into other savings and investments. Andrew Tully, pensions technical director at Retirement Advantage, said: “The pension freedoms have opened up a Pandora’s box. People are worried about doing the wrong thing, but are not getting proper financial advice.
“Many are going for the option they understand – taking cash. Withdrawing money from a tax-efficient pension to simply place on deposit is frankly bonkers.”
Remember, there’s no need to access a pension if you’ve no plans to spend it. That just leaves you at risk of paying too much tax, and from fraudsters waiting to relieve you of your money.