Over 55s Lead Charge to Cash In Pensions

If you are thinking of making changes to your pension, the government offers a guidance service. We urge our members to use the help and advice available. Visit Pension Wise for free, impartial guidance.

Rising Trend Among Over-55s

Since April 2015, over-55s have enjoyed unlimited access to their pension savings, ending the need to purchase an annuity. Official statistics reveal that savers aged 55–59 are now the most likely age group to cash in their pensions.

Key Withdrawal Statistics

The Financial Conduct Authority (FCA) reports that almost 2,000 people a day withdrew money from their pensions between July and September 2015. In about 68% of cases, savers fully cashed out their pots, typically withdrawing less than £30,000. Around 57% of withdrawals were below £10,000.

Why Pension Reforms Matter

Industry experts describe the impact of pension reforms as a financial “boom” for those under 60. Small pension pots are being viewed as funds for immediate use—whether to clear debts, make home improvements or finance holidays—rather than long-term retirement income.

Analyst Perspectives

Alan Higham, independent pensions analyst, explains: “Previously, savers could only take a quarter of their pension tax-free at 55, so many waited until age 65. Now they can withdraw the entire pot immediately.”

Tom McPhail of Hargreaves Lansdown adds: “In the first six months of this tax year, we’ve seen as many people accessing their pensions as used to in a full pre-reform year. While the freedoms are widely welcomed, we must guard against unintended consequences and ensure savings last throughout later life.

Purchasing Annuities: A Drastic Fall

Only 13% of savers now buy an annuity—a steep drop since reforms ended compulsory annuitisation. Among those who do, just 48% shop around, even though comparing rates on a £100,000 pot can yield more than £1,000 extra per year.

Low Uptake of Guidance

Despite the benefits of Pension Wise, only 17% of savers used the service. Fiona Tait of Royal London warns that without proper guidance, many risk depleting funds too quickly.

Further Reading

• NHS: Where Does All That Money Go? The Figures Are Breathtaking
• Whistleblower Sues for £200,000 After Zero-Hours Dismissal