The UK pension system is once again in the spotlight as the Department for Work and Pensions (DWP) considers changes that could affect thousands of people.
Many savers are already dipping into their retirement funds much earlier than the official State Pension age, creating a growing concern about future income.
With the government preparing to raise the minimum pension access age, people born in certain years may find themselves locked out of their pensions for longer. This decision has sparked debates about financial security, retirement planning, and the real future of pensions in the UK.
Pension Withdrawals Before State Pension Age
Figures show that since 2015, when pension freedoms were introduced, people under the age of 65 have withdrawn an incredible £65 billion from their retirement funds.
- 70% of withdrawals are being made by individuals below State Pension age.
- Nearly half of these withdrawals were taken by those under the age of 60.
This trend highlights that people are choosing to access their savings much earlier, often leaving less money for later life.
Breakdown of Withdrawals
The withdrawals are divided across different age groups, showing how early access is impacting future pension stability.
| Age Group | Total Withdrawals (£ Billion) | Percentage of Total Withdrawals |
|---|---|---|
| Under 60 | £36 Billion | 35% |
| 60 – 64 | £29 Billion | 28% |
| 65 and above | £38 Billion | 37% |
| Total | £103 Billion | 100% |
From the above, it’s clear that under-60s have withdrawn more than one-third of all pension money taken since 2015.
Why People Withdraw Early
Many workers believe they may not live long enough to fully enjoy their pension savings. Others withdraw early to manage debts, medical expenses, or cost-of-living pressures.
However, experts warn that this trend could lead to a “retirement time bomb” where people run out of money in old age.
Stephen Lowe from the Just Group explained that early withdrawals have become so common they are now seen as the “new normal.” He warned that many people will either have to work much longer than expected or live on a reduced income during retirement.
The Government’s Next Move
The government is set to increase the minimum pension access age from 55 to 57 in April 2028. This means:
- People born after April 1971 will not be able to access their pensions until they turn 57.
- Anyone born before April 1971 can still access their pensions at 55.
This change is meant to slow down the rush of early withdrawals and encourage people to keep their retirement savings invested for longer.
Concerns for the Future
Experts are concerned that locking pensions until age 57 may not be enough. If people continue to withdraw too early, future retirees could face:
- Financial insecurity in later life
- A longer working life beyond their expectations
- Increased dependence on state benefits
The government is also facing pressure to make financial education stronger so that savers can understand the long-term risks of accessing pensions early.
Advice for Pension Savers
Stephen Lowe and other financial experts strongly recommend that people:
- Take professional financial advice before withdrawing any pension funds.
- Consider free guidance from Pension Wise, which offers impartial advice for people approaching retirement.
- Think long-term about how much money will be needed during retirement.
By carefully planning, savers can avoid financial struggles later in life.
What This Means for You
- £103 billion has been withdrawn from pensions since 2015.
- Under-60s alone have withdrawn £36 billion.
- Minimum pension age will rise to 57 in April 2028.
- People born after April 1971 will be directly affected.
- Experts warn of a retirement crisis if current habits continue.
The UK’s pension landscape is changing quickly, and thousands of people born in certain years will soon face delayed access to their retirement savings. While withdrawing early might seem attractive, it carries serious risks for long-term financial health.
With the State Pension age already high and expected to rise further, the combination of early withdrawals and limited funds may force many to work longer than planned.
Now more than ever, people must seek professional financial advice and carefully plan for their future to ensure stability in retirement.
FAQs
What is the new minimum pension age in the UK?
The minimum pension age will increase from 55 to 57 in April 2028.
Who will be affected by the pension age change?
People born after April 1971 will only be able to access their pensions at 57, not 55.
How much has been withdrawn from pensions since 2015?
A total of £103 billion has been taken, with 70% withdrawn before State Pension age.