Almost a quarter (21%) of respondents plan to release cash from their pension funds over and above their tax-free lump sum while they are still working, according to research by Portus Consulting.
Its survey of 1,080 UK employees also found that 24% of over-55s plan to take cash out of their pension over and above their tax-free lump sum, rising to 27% among those aged 55 to 64.
The study also found that:
- 58% of respondents do not expect to have enough income when they retire.
- Around half (49%) believe they will have to work beyond 65 because they will not have enough money to live on.
- 22% of respondents aged 45-54 are not aware that they can take cash from their pension pot following the introduction of the pension freedoms in April, and 7% of those aged 55-64 are unaware of this.
- 37% of respondents will use some or all of the cash to clear debts, and 35% plan to take cash to pay for a luxury break. This compares to 35% and 28%, respectively, of respondents aged 55-64 who are planning to release funds from their pension before they retire.
Steve Watson, commercial director at Portus Consulting, said: “Now that it has become possible to withdraw more cash from your pension early, there is a real risk that people will give into temptation and take out money which they should save for retirement.
“It’s not just an issue for employees, it is increasingly an issue for employers; employees forced to remain in the workplace is not the best for engagement and productivity. Performance issues are inevitable and younger talented employees will become frustrated as career progression is slowed down.”