Seven in 10 of the three million savers who have withdrawn funds flexibly since the 2015 pension freedom changes were under 65, analysis of Department for Work and Pensions (DWP) data has revealed, sparking concerns about early access to retirement savings.

The analysis by Just Group found that approximately 43 per cent of all flexible payments were made to those aged under 60, with nearly 28 per cent more aged between 60 and 64.

These figures come from an analysis of the DWP’s private pension statistics data, which found that while pension participation rates are improving, concerns about pension adequacy continue to grow.

This context makes early withdrawals even more concerning, as accessing funds too soon could further undermine people’s long-term retirement security.

The analysis from Just Group also showed that overall, £103bn has been taken as flexible payments since 2015, with £36bn (35 per cent) paid to those below 60 and nearly £29bn (28 per cent) to those aged between 60 and 64.

Just Group emphasised that these figures revealed a widespread trend of pension withdrawals occurring well before the state pension age - something the Financial Conduct Authority (FCA) has previously labelled “the new norm”.

However, Just Group group communications director, Stephen Lowe, suggested that "if the FCA had described this as an ‘epidemic,’ it could prompt greater awareness and more action to address the potential consequences”.

“Pension flexibility is double-edged – it can be done for good or bad reasons. 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,” he warned.

However, Lowe cautioned that the DWP figures do not include the billions taken as tax-free cash, which can be accessed without making a flexible withdrawal, nor do they account for the pension money used to buy annuities or taken through capped drawdown.

In light of this, Lowe suggested that these figures give a “glimpse” of one aspect of pension withdrawal, but do not show the full extent of early access in terms of the number of individuals taking cash and the amounts withdrawn.

Just Group suggested the planned increase in the normal minimum pension age from 55 to 57 in April 2028, further indicating governmental concern about premature access to pension funds.

Lowe highlighted a “massive blind spot” in knowledge in this area, as the industry doesn’t know how much tax-free cash is being taken, why people are accessing pensions early or what is being done with this money.

He said there’s some data about pension pots, but when it comes to individual people, the information is “much weaker”.

“The result is that 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,” he stated.

Given this uncertainty, Lowe emphasised the role professional advice could play in assisting people with their decisions for the future.

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