Pension withdrawal requests for under 55s increased 6x in March 2020 says PensionBee

Digital pension provider PensionBee has seen a spike in customers requesting to withdraw from their pensions before the minimum age of 55. 

Figures from the fintech also show that the average age of customers requesting early access is 35—20 years younger than the minimum age.

In December 2019 there were just five inquiries about withdrawing funds from a pension early, compared to 31 in March 2020.

PensionBee says the sharp increase in requests is down to financial hardship caused by the coronavirus pandemic.

One PensionBee customer, aged 32, said: “I wanted to see if I could withdraw early as I have been made redundant due to Coronavirus and am 5 months pregnant.”

Attempting to take the cash early can result in loss of the entire pot and a 55 per cent tax charge from HMRC, only in cases of extreme ill health or terminal illness would early access be allowed, and usually signed off by a doctor.

PensionBee has also said it has seen an “alarming” increase in Google ads for companies saying that customers can “sell or cash in” their pensions early.

Clare Reilly, head of corporate development at PensionBee, said: “COVID-19 has put us all in unchartered territory. One of the worrying economic side effects is the increasing number of people in their thirties who are considering taking the irreversible step of trying to access their pensions early.” 

“While it might seem an attractive decision when times are tough, we urge consumers to exercise extreme caution when considering online financial advice around early pension release and ‘free pension reviews’,” she added.

Reilly also reminded customers to be vigilant when seeking financial advice on the internet as “scammers prey on fear around economic uncertainty to mislead savers and are increasingly using search engines to add a layer of legitimacy to their operations.” 

Despite the jump in withdrawal requests, PensionBee saw an increase of 22 per cent for new signups in March 2020 compared to the same month last year.