Growing numbers of older people are withdrawing larger sums from their private pensions to cope with the rising cost of living, sparking warnings of future 'pensioner poverty'. Data from online investment platform Interactive Investor shows that customers withdrew a quarter more from their pensions in January compared with previous years, with the average withdrawal reaching £1,944.
In February, the average withdrawal was £1,910, up 7% on the same month in previous years. Former pensions minister Ros Altmann described the trend as a 'danger signal for the future', cautioning that those taking money out early risk leaving themselves without sufficient funds in retirement.
'As the cost of basic essentials, such as food and heating have soared, people need higher incomes to cover their bills,' Altmann said. 'For the over-55s, this could mean being tempted to take more money from their pension funds. This is worrying because private pensions are meant to support people after they finish work, rather than topping up pre-retirement earnings.'
Becky O'Connor, head of pensions at Interactive Investor, noted that the combination of higher living costs and falling stock markets creates a 'double depletion' effect on savings. 'Withdrawing more from a diminishing pot means a higher risk of running out of money later on,' she said, adding that she expects withdrawals to rise further as living costs increase.
