Dash for cash? One in four over-55s raid their pension fund to pay for luxury holidays and clear debts

Plan to dip into your pensions savings? You’re far from alone. Some 27 per cent, or over one in four, employees aged between 55 and 64 plan to head for their pension pot while still in work.

The figures show most, over two thirds, want to use the cash to either pay off a debt or purchase a luxury holiday.

Younger workers are slightly less likely to have similar plans with 21 per cent of the whole workforce planning to release a lump sum from their pension fund, according to a study from employment benefits consultancy Portus.

The company’s consulting commercial director Steve Watson was concerned by the results:

Now that it has become possible to withdraw more cash from your pension early, there is a real risk that people will give into temptation and take out money which they should save for retirement.

Using up savings could mean many Britons simply won’t be able to afford to retire at retirement age. Already, over half of people in work expect not to have enough income in retirement, and almost as many expect to have to work beyond the age of 65 to have enough money to survive.

This study comes six months after the government’s pensions freedoms scheme came into force, allowing people to release cash from their savings. The scheme has proven wildly popular, with some £3bn released in the first six months alone.

The number dipping into their pension ahead of time could soar higher still, as many are still unaware that it’s even an option: Nearly one in four aged 45-54 don’t know they can do this, which falls to just seven per cent of those aged 55 and above.