More than £2.5bn has been withdrawn from pensions during the first quarter of 2020, data from HM Revenue & Customs has revealed.
This was taken out by what tax specialists are calling a record number of people: 348,000 in total.
Many people under 55-years-old have also been attempting to cash in their pots early – no doubt lured by the snake-oil salesmen waiting to pounce on the vulnerable.
While people fear for their small businesses and livelihoods as a result of the recent economic slump, there will always be predators attempting to leverage that fear in their favour.
It is caving into fear instead of carrying out a sensible financial planBut even if these 348,000 people have not been victims of pensions fraud, the idea that one can borrow from tomorrow’s storehouse in order to eat today seems attractive.
After all, we do not know what tomorrow will bring, but we do know what we need to do today in order to survive and thrive. So why not take from savings – even pension savings – and put food on our plates today?
It sounds like wisdom, but really this is foolishness. It is caving into fear instead of carrying out a sensible financial plan. It is stealing from your future self, with all the needs that will be waiting around the corner of time.
All commentators are saying this is a bad time economically – more so than in 2008, 2001 and even in 1987. Memes equate it with the Great Depression of 1929, although today we have no Franklin Roosevelt with New Deal plans to fix it.
If you demand jam today, you cannot expect jam tomorrow. If you take away from your pension now, you will not have it there when you need it to pay for care home fees or to help you enjoy a longer-than-expected retirement, or even to pass onto your dependents.
The idea we can steal from ourselves is one of the biggest frauds of all and the perpetrators are the victims themselves. Any adviser would tell these people: stop stealing from your future to pay for today.
Simoney Kyriakou is editor of Financial Adviser
