The latest figures show that retirees are withdrawing their pensions at an unsustainable rate. Many could end up running out of money, forcing them to make do only on state pensions and benefits.

Since the 2015 pension freedom reforms, savers no longer have to tie up their money in an annuity upon retirement, but are free to cash in their pension funds from age 55.

While most have been careful with withdrawals, the number of pension withdrawals at an unsustainable rate has increased in fiscal year 2020/2021, according to new figures from the Financial Conduct Authority (FCA).

Many could thus miss a pension and spend their last years in poverty.

Most retirees now leave their invested funds and take lump sums or regular income when they need it, a process known as a withdrawal.

More and more people are buying annuities, which provide security because they pay out guaranteed income for life.

With the draw, the income is not guaranteed. If you make too many withdrawals, your fund may run out.

The pandemic has heightened the danger, forcing many people to plunder their pensions or take early retirement, said Stephen Lowe, group communications director at retirement specialist Just Group.

Typically, savers can withdraw four percent of their pension each year without depleting it. Disturbingly, many are getting double that amount.

“Withdrawal rates continue to climb, with 43 percent now withdrawing eight percent of their pension each year, up from 40 percent previously,” Lowe said.

Three-quarters of today’s retirees now withdraw more than the safe withdrawal rate of four percent, he added. “This raises concerns about the sustainability of their retirement income. “

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“Markets can crash in an instant, and pulling out at such a rate is risky as it can be difficult to rebuild your pot.”

Greer said retirement freedoms have been a big success, but people need to be careful. “The state pension is not enough to live comfortably, so make sure your private savings can last. “

Managing retirement withdrawals is likely to become more difficult as inflation rises, as it could force millions of people to withdraw more money to cover their daily expenses.

Another worry is that more than half of those who accessed their pension funds for the first time last year did so without taking any guidance or counseling, reaching two-thirds of those who withdrew completely. their money.

Lowe urged people to seek advice or use the free Pension Wise service before making key retirement decisions.