The number of people aged between 55 and 59 making lump sum withdrawals from their pensions increased by 8 per cent year-on-year to 288,600 in 2019/20, according to Salisbury House Wealth (SHW) research.

Around 22,100 more people in this age cohort withdrew lump sums in comparison to 2018/19, when 266,500 accessed their pension.

SHW data showed that, as of 30 June 2020, £37.7bn had been withdrawn in lump sums since pension freedoms was introduced in 2015, with £2.3bn withdrawn by 68,000 individuals in Q2 2020 alone.

SHW warned that the record levels of people withdrawing could expose pensioners to running out of money part way through their retirement, especially as life expectancies are continuing rise.

“The number of people dipping into their pensions early continues to hit new highs. They need to be careful,” commented SHW managing director, Tim Holmes.

“Life expectancies mean people could face larger costs later in life, such as care home and nursing costs than they expect. Anyone accessing their pension early needs to take that into account.”

“Longer life expectancies will have a particularly significant effect on those people who have just started working and saving into a pension. Their retirement may last 25 years or more.”

The number of people aged 55-59 accessing their pensions for a lump sum has increased each year since 2015, with 117,600 doing so in 2015/16, 184,300 in 2016/17 and 212,400 in 2017/18.

Holmes added: “Coronavirus has put unprecedented strain on people’s finances which may have led some to dip into their pension as a way to tide them over – the lower income they are getting through furlough.”

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