State pension age update as millions of savers losing thousands due to simple mistake | Personal Finance | Finance

Savers who take advantage of flexible pensions could be left without money for their retirement, financial advisors have warned. As the cost of living soars and government contemplates raising the pension age, data has revealed that nearly three-quarters of people who accessed their pension money through flexible retirement schemes were under 65.

According to Department for Work and Pensions figures, 28% of people who have made flexible withdrawals since pension freedom rules were introduced in 2015 were aged between 60 and 64, and 43% were under 60. The Financial Conduct Authority (FCA) has previously described this trend as “the new norm”, but Stephen Lowe, group communications director at Just Group, warned of stark consequences for this trend, which he said could leave pensioners without sufficient money for their retirements.

He told GB News: “Perhaps if the FCA had called it an ‘epidemic’ it might be viewed in a different light and more steps taken to understand the consequences.”

He warned: “Ultimately pensions are primarily to provide retirement income and that money won’t be available in old age if people are using it to subsidise their lifestyle long before retirement.”

Lowe believed it “can be done for good or bad reasons”, but said there was a “massive blind spot in our knowledge” in understanding the consequences.

According to DWP figures, the average withdrawal increased with the age groups, with under-60s taking £27,600, those aged 60-64 withdrawing £34,500, and over-65s taking out £43,100. However, these statistics exclude tax-free cash withdrawals, which could significantly alter the figures.

He said: “We don’t know how much tax-free cash is being taken. We don’t know why people are accessing pensions early or what they are doing with the money.

“We can’t tell how many accessing cash early are doing it for savvy financial planning reasons compared to how many are taking unsustainable amounts that will likely leave them short in the future.

Lowe urged anyone considering early pension access to seek professional advice or use the free Pension Wise guidance service.

It comes as the government reviews the state pension, which could include raising the current state pension age of 66.