Since the introduction of pension freedoms in 2015, UK savers have flexibly withdrawn a staggering £102.3 billion from their pension pots, according to recent data from the Department for Work and Pensions (DWP).
But behind these impressive numbers lies a growing concern — more people are dipping into their pensions well before retirement age, potentially putting their long-term financial security at risk.
Younger Savers Accessing Pensions Early
The DWP found that seven in ten people who withdrew pension funds over the past decade were under 65.
43% of withdrawals were made by people under 60
A further 28% came from those aged 60 to 64
In total, £36 billion (35%) was withdrawn by individuals under 60, and £29 billion (28%) by those between 60 and 64.
On average, people under 60 took out £27,600, rising to £34,500 for the 60–64 age group. These figures exclude tax-free lump sums, meaning the true total could be even higher.
Thinking of accessing your pension early?
Speak to a qualified financial planner before making any decisions — it could make a huge difference to your retirement future.
A Moving Target: State Pension Age on the Rise
The State Pension age is currently 66 for men and women, but it’s increasing. Between 2026 and 2028, it will rise to 67, with a further increase to 68 expected between 2044 and 2046.
At the same time, the minimum private pension access age — the earliest age you can draw from your personal pension — will rise from 55 to 57 in April 2028.
These gradual increases reflect longer life expectancies and the government’s efforts to balance public finances. But they also add extra complexity for those planning when to retire or access their savings.
Why More People Are Withdrawing Early
Several factors are driving this trend of early withdrawals:
Inheritance Tax (IHT) changes: From April 2027, defined contribution pension pots will be included in IHT calculations. Some people are choosing to spend rather than save to reduce potential future tax bills.
Rising living costs: Inflation and higher household expenses have prompted many to dip into pensions to maintain their standard of living.
Uncertainty about future rules: Some worry that access conditions or tax rules could tighten later, prompting early withdrawals “while they can.”
While these reasons are understandable, withdrawing pension funds early can have serious long-term implications. It may reduce your retirement income, limit future investment growth, and trigger unexpected tax charges.
Get Expert Pension Advice Before You Act
Managing your pension is one of the most important financial decisions you’ll ever make. Choosing when and how to access your savings involves balancing tax, income needs, and future goals — and it’s rarely straightforward.
Before taking money from your pension, it’s vital to understand the impact on your long-term financial wellbeing. Speaking to a qualified financial adviser can help you:
✅ Evaluate the best time to access your pension
✅ Understand the tax implications of withdrawals
✅ Plan for sustainable, lifelong retirement income
✅ Make informed decisions aligned with your personal goals
Ready to make confident decisions about your pension?
Contact our expert financial planners today for personalised advice on pension planning and retirement income strategies.
Important Information
This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on individual circumstances and may change in the future.
A pension is a long-term investment, not normally accessible until age 55 (rising to 57 in April 2028 unless you have a protected pension age). The value of investments and any income from them can go down as well as up, and you may get back less than you invested.