Almost one million people are set to reach age 55 next year resulting in extra demand for pension freedoms, according to official data.
According to population data from the Office for National Statistics, published on Friday (August 23), 933,015 individuals are set to reach age 55 in 2019, the age at which a pension pot can be accessed under the pension freedom rules.
This figure is expected to peak at 942,791 in 2020 as it reaches 9.2m people in the next ten years.
Pension freedom rules mean those aged over 55 no longer have to purchase an annuity to access their pension income but can instead enter drawdown or take a cash amount.
In total, more than £28bn has been withdrawn from schemes since the introduction of the pension freedom rules in 2015 with each person making an average of six withdrawals.
The data, published by HM Revenue & Customs on July 31, showed a 21 per cent increase in the amount of funds being withdrawn from individuals’ pensions in the second quarter of this year, as £2.75bn was withdrawn flexibly, up from £2.27bn in the same period last year.
A record 336,000 savers accessed their pension in the period, withdrawing £8,200 on average.
This compared with 264,000 dipping into their pension pot in the same period last year, taking an average of £8,600 per person.
Alistair McQueen, head of savings and retirement at Aviva, said: “The popular pension freedoms are about to boom like never before.
“Today’s population data suggests the pension freedoms are about to witness a decade like we may never see again.”
But Anne Willmot, age campaign director at charity Business in the Community, warned the increase in 55 year olds will mean that more jobs will need to be made available for older workers as they aim to top up their pension pot.
Ms Willmot said: “The impact of people living longer will have all manner of consequences, not just socio-political, but also corporate with changing demographics in workplaces across the UK.
“If there are an additional 8.2m people aged 65 or above in 50 years’ time, it’s fair to assume that a sizeable percentage of them will want or need to remain in the workplace in order to maintain a decent level of income.
“The ticking pensions time bomb will certainly be one major driver of people wanting to remain in the workforce longer, but so, too, will improved health in later life.”
She added: “Companies must be transparent and publish the number and percentage of older people they employ to show that they are tackling the issue of ageing workforces straight on.
"Responsible businesses are already preparing for both the challenges and opportunities that an ageing population will bring, and putting in place age-friendly policies to make the most of the deep structural change emerging in the UK workforce."
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