Growing amounts of UK pension savers have been withdrawing money from their pensions in a sign that the over 55’s are in need of a short term cash boost to see them through the coronavirus pandemic.
Figures just released from the HM Revenue and Customs show that, during July, August and September, 347,000 people removed cash from pension savings plans to help them live which is a 6% increase on the same time last year.
HMRC said that this goes against the grain on normal figures expected.
They issued a report saying “The number of individuals making withdrawals typically peaks in April, May and June, the beginning of the tax year, before dropping in July, August and September. However this year, withdrawals have increased in July, August and September. This change in behaviour may be attributable to the impact of the COVID-19 pandemic.
” The rise in the figures are a cause for concern as it is showing that people are getting more desperate to access cash to see them through these troubling times. Becky O’Connor, head of pensions and savings at Interactive Investor, said
“The increase in the number of people turning to their pension pots this year suggests that more people need to access their pension pots to meet living costs. Some older people may also be accessing cash to help children with things like first home deposits, as continued house price growth together with tighter mortgage lending has made getting on the ladder more challenging.”
Emma Watson, head of financial planning at Rathbone Investment Management, also commented on the situation, saying “Given the negative impact of COVID-19 on many people’s income and savings, it comes as little surprise that an increasing number of people are taking advantage of pension freedoms to help them get by and feel more secure. She went on to say that people need to realise that it is a balancing act as taking money in the short term will affect their amounts in later life when they will need it and added that, after the crisis, they will need to make up the shortfall to enable themselves to have a comfortable retirement.
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