A quiet shift is sweeping through Britain’s retirement landscape, with millions choosing to access their pensions years before they officially retire.
This widespread pattern of early access has raised concern that many savers could face financial shortfalls in later life.
Nearly three-quarters of pension savers accessing flexible withdrawals are doing so before reaching 65, according to Department for Work and Pensions figures.
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The data shows that 71 per cent of the three million people who have made flexible withdrawals since pension freedom rules were introduced in 2015 were under 65.
More strikingly, £65billion of the total £103billion withdrawn over this period has gone to those below state pension age.
This widespread pattern of early access has prompted retirement specialist Just Group to voice serious concerns about the long-term sustainability of retirement incomes, warning that many savers could face financial shortfalls in later life.
The DWP data reveals that 43 per cent of flexible pension payments went to individuals under 60, while another 28 per cent were made to those aged between 60 and 64.
In monetary terms, savers below 60 withdrew £36billion, representing 35 per cent of the total amount. Those aged 60 to 64 took out £29billion, accounting for 28 per cent.
The remaining £38billion was withdrawn by people aged 65 and above, who made up just 29 per cent of those accessing flexible payments.
These statistics exclude tax-free cash withdrawals, which could add billions more to the total, as well as money used to purchase annuities or accessed through traditional capped drawdown arrangements.
Savers below 60 withdrew £36billion, representing 35 per cent of the total amounth
| GETTY
Even those on lower incomes see significant benefits from financial planning | GETTYThe average withdrawal varied by age group, with under-60s taking £27,600, those aged 60-64 withdrawing £34,500, and over-65s accessing £43,100.
The Financial Conduct Authority has previously described this trend as "the new norm", but Stephen Lowe, group communications director at Just Group, suggests a different perspective might be needed.
"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 said.
Lowe highlighted the dual nature of pension flexibility, noting it "can be done for good or bad reasons".
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."
The government's decision to raise the minimum pension access age from 55 to 57 in April 2028 signals recognition of the risks associated with early pension access.
Significant gaps exist in understanding the full scale of early pension access, according to Lowe, who described this as "a massive blind spot in our knowledge".
"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," he explained.
Current data provides information at the pension pot level but lacks comprehensive person-level analysis
| GETTY IMAGESCurrent data provides information at the pension pot level but lacks comprehensive person-level analysis that would consider all pensions and assets together.
"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 said.
He urged anyone considering early pension access to seek professional advice or use the free Pension Wise guidance service.