UK. Warning sounded as 42% of pensions raided at ‘unsustainable’ levels
Savers have been warned they could face trouble in the future as the regulator found 42 per cent were taking more than 8 per cent from their pensions each year.
Read also UK. PensionBee and Plaid team up to call for ‘open pensions’
Latest data on the retirement income market from the Financial Conduct Authority, published yesterday (September 29), found savers with smaller pension pots, typically worth between £10,000 and £100,000, were particularly susceptible to high withdrawal rates.
Read also UK pensions tax relief review deemed ‘unnecessary’
Those with pots worth more than £250,000 tended to be more cautious and take smaller withdrawals. Steven Cameron, pensions director at Aegon, warned this level of withdrawal from smaller pots was not feasible in the long term.
Read also IMF says Spain will not return to pre-pandemic levels of activity until 2023
He said: “While those with tiny pots who are fully encashing them may not need advice, the worryingly high proportion taking large withdrawals of above 8 per cent really do need help in understanding this level of income is not sustainable for life.”
The data showed that of those using an 8 per cent withdrawal rate, more than two thirds (67 per cent) had pots worth between £10,000 and £99,000. This compared with 24 per cent of those with funds valued at more than £100,000.
Typically, savers with larger pensions accessed their pots at a withdrawal rate of between 2 and 3.99 per cent.
Read more @FT Adviser
