Majority of workers dip into pension pot before retirement

A new survey has found that over three-quarters of retirees have had to dip into their pension pots early.

Of the 78% who have done so, 52% took funds out five years before their selected retirement age, while 21% started taking money out 10 years before.

The Scottish Widows findings also show that the average amount a customer withdraws by age 65 is £47,000.

Graeme Bold, Workplace Pensions Director at Scottish Widows, commented on the findings, “Our data shows that the vast majority of people withdraw money from their workplace pension before reaching retirement age.

“Whilst early withdrawals are often an unavoidable necessity, draining a pension pot too soon can carry risks which both providers and retirees should be taking steps to guard against where possible.”

Graeme added, “As an industry, it’s crucial that we better understand pension holders’ behaviour so that we can help them save enough for a comfortable retirement. More needs to be done to encourage people to keep their pensions invested for as long as possible.

“It’s up to pension providers to have the support in place for people through a lifetime of investment – before, during and after they reach retirement age.

“The pensions landscape is ever-changing – people are living longer which means pensions must cover longer retirements, and more people are choosing to phase in to retirement with part time work. Therefore, it’s essential that pensions are flexible enough to be fit for purpose in today’s world.”

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