UK - A growing number of people aged between 50 and 60 are opting to unlock their pensions, Close Wealth Management claims.
The portfolio manager believes as many as 10,000 people over 50 have joined schemes which allow them to unlock their pension before retirement, take 25% as a tax-free lump sum and annuitise the remainder.
But it warns that annuity income can drop by 90% or more in such cases.
CWM chief executive Martin Smith said: “These schemes might have short-term benefits, but have distinct stings in the tail with the prospect of a life of poverty in retirement.”
OPRA spokesman Nick Edmans said that pension unlocking is not a decision that should be made rashly.
“Most people will find it extremely difficult to survive on the basic state pension when they retire, so any extra provision they’ve got will be very important to them.”
He added: “If you are talking about someone who is in dire straits, such as faced with losing their home or something like that, it is a tough decision they are having to make and one that shouldn’t be taken lightly.”
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