UK adults looking to access pensions earlier than planned amid cost-of-living crisis

Approximately one in seven (13 per cent) UK adults that are looking at ways to increase their income amid the cost-of-living crisis expect to access their pension earlier than planned or have already done so, research from Canada Life has found.

Canada Life’s survey looked at how people planned to increase their incomes to make ends meet as the rising cost of living squeezes the personal finances of many.

It found that more than half (55 per cent) have implemented or are looking at ways to boost their incomes, equivalent to 28.9 million people.

Selling unwanted belongings was the top way adults planned to increase their income (36 per cent), followed by looking for a better paying job (28 per cent) and looking for a second paid job (28 per cent).

However, many were also looking to dip into their personal finances, with 22 per cent of those looking to boost their income using or planning to use savings or investments, 13 per cent accessing or planning to access their pensions earlier than expected, and 10 per cent accessing or considering accessing equity in their home.

Following the findings, Canada Life technical director, Andrew Tully, urged the pensions industry to make sure that people are aware of the tax and cost implications of accessing their pensions earlier than planned.

“The cost-of-living crisis is causing the majority of people to re-evaluate their financial situation. And, with inflation set to reach double-digits later this year, we can expect to see more individuals tightening their belts and looking for additional ways to supplement their income,” he stated.

“However, with the research showing that over one in 10 adults are looking to access their pension early, we, as an industry, need to ensure that these individuals are aware of the tax and cost implications of doing so. Not only will your pension have to stretch further into the future, you are likely to pay tax and you can also trigger the Money Purchase Annual Allowance (MPAA).

“The use of emergency tax on initial withdrawals may mean people initially receive less than they were anticipating, and have to wait for HMRC to pass on the remainder at a later date. It’s worth keeping mind if you plan on topping up your pension in the future the MPAA restricts the amount you can to £4,000 a year, which includes both you and your employers’ contributions.

“While it’s hard to predict how long inflation will remain high, it’s vital that we encourage people to look beyond the here and now, and look at their finances over the medium to long-term. For those concerned about their financial future, speaking to a financial adviser is a sensible step. These professionals can help give a holistic view of your personal circumstances, ensuring that you are on track to achieve your financial goals.”

    Share Story:

Recent Stories

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Global equities and transition investing
Pensions Age editor, Laura Blows speaks to Royal London Asset Management equity investment director, Jonathan Price, about transitioning to sustainable investments within global equities
Cost transparency
Pensions Age editor, Laura Blows, discusses investment cost transparency and savings with Aon’s Neil Smith and Chris Hawksworth. Please click here for an edited write-up of the video

Advertisement Advertisement Advertisement