Early pension withdrawals rise among the over-55s

SAVERS increasingly dipped into their pension pots over the summer, suggesting they have been finding it hard to make ends meet during the pandemic.

Nearly 350,000 people accessed their nest egg between July and September, roughly 20,000 more than the same period last year, according to figures from HM Revenue and Customs.

Jon Greer, of pensions firm Quilter, said the rise suggested more people needed additional cash to see them through the crisis – and warned that worse could be to come.

“It is likely many people might need to dip into their pension to cover bills and expenses, particularly during the early part of next year when mortgage and credit holidays are due to come to an end,” he said.

A number of coronavirus support schemes come to an end today while tighter lockdown restrictions have put added pressure on to businesses.

The figures follow reports that the over-55s are increasingly supporting younger relatives who are more likely to suffer from the financial consequences of the pandemic.

Despite the increase in withdrawals from pension pots the average amount taken out was £6,700 – a 7 per cent drop on the same period last year.

The total value of flexible withdrawals since the rules were introduced in 2015 is more than £37 billion.

Steven Cameron, of Aegon, an asset management company, warned of the dangers of dipping into savings.

“Pensions are designed to provide an i ncome throughout retirement and reducing the amount of income withdrawn during a period of downturn could be important for the longevity of the pension pot,” Mr Cameron said.