Rush by over-55s to unlock their pensions brings warnings of impoverished old age

A RECENT surge of almost 160,000 older savers accessing their pensions has pushed the total amount withdrawn since the Government liberalised the rules to above £6 billion.

Figures published yesterday by HM Revenue and Customs appear to show a large rise in savers withdrawing cash, with 159,000 people using pension freedoms in the second quarter of 2016, around twice the number of 84,000 in the same period last year.

In April 2015 over-55s were given the right to spend up to 100 per cent of their pension as they liked, instead of being forced to buy an annuity.

Providers reported that they were besieged by callers desperate to unlock their savings.

The average amount withdrawn by savers using the new flexibility was £11,000, more than a third of the average pension pot of £30,000, suggesting some people could be in danger of spending their money too quickly.

Simon Kirby, economic secretary to the Treasury, said: “It’s only right that people should have a choice over what they do with their money and today’s figures show that pension freedoms continue to be a popular choice.”

But Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “It is important to track not just what people are doing but why they are doing it and what they have got left behind in terms of pension provisions for later years.

“We’re also concerned about the ongoing failure of shopping around.”

Adrian Walker, a wealth retirement planning expert at Old Mutual, said there was a danger that people were “sleepwalking into an impoverished old age”.