Tory cost of living crisis sees near 50% rise in number of over-55s cashing-in their pension early

Tory cost of living crisis sees near 50% rise in number of over-55s cashing-in their pension early

The Tory cost of living crisis saw almost 300,000 more people cash-in their pension early last year compared to in 2020-21, new statistics show.

In total, 911,000 people withdrew almost £13 billion through ‘pension freedoms’ over the last financial year – a 45% rise on 2020-21.

The statistics – published by HMRC – show that during the last quarter alone, 567,000 over-55s cashed-in their pension early, an almost 75% jump on the same quarter in 2020.

Labour’s Shadow Work and Pensions Secretary, Liz Kendall MP, has accused the Tories of “bringing chaos and uncertainty to family finances.”

Kendall has warned that the living standards of future retirees has been put at risk by the Government’s economic mismanagement. 

Liz Kendall MP, Labour’s Shadow Work and Pensions Secretary, said:

“The Tories have brought chaos and uncertainty to family finances, forcing more and more people to cash-in their pensions early.

“Through rising mortgages and soaring bills, the Government’s economic mismanagement is putting the living standards of future retirees at risk.  

“Labour will bring stability back to Britain’s economy, tackle the cost of living crisis and ensure security and dignity in retirement.”

Ends

Notes: 

• HMRC statistics published today show that 911,000 individuals withdrew flexible payments from pensions over the last financial year – a 45% increase in the number of individuals withdrawing in 2020-21.

• The statistics also show that:

• “Between 1 April and 30 June 2023, £4 billion of taxable payments was withdrawn from pensions flexibly by 567,000 individuals across 1.3 million payments. The average taxable withdrawal per person was £7,100 in this period. There was a 17% increase in the value of payments withdrawn in this quarter comparted to the same quarter in 2022, and a 15% increase in the number of individuals withdrawing.”

• Compared to the second quarter of 2020, it represents a 73% increase in the number of individuals withdrawing. 

HMRC, ‘Private pension statistics’, 27 September 2023, https://www.gov.uk/government/statistics/personal-and-stakeholder-pensions-statistics/private-pension-statistics-commentary-september-2022

• The OBR has previously said it “assumes that people will make use of earlier withdrawals to manage the rise in the cost of living this year”.

OBR, March 2022 Economic and Fiscal Outlook, pg. 216, https://obr.uk/docs/dlm_uploads/CCS0222366764-001_OBR-EFO-March-2022_Web-Accessible-2.pdf