Almost three in 10 (28%) retirees over the age of 55 have withdrawn money from their pension before they retired, Just Group has found.

When asked the reason for why they had accessed these funds, more than half (52%) of those surveyed said that they had retired sooner than expected, while 32% of this group said they needed the income to bridge the gap to state pension age because of redundancy or lower earnings.

Group communications director at Just Group, Stephen Lowe, said: "Our research shows about one-third of over 55s took pension money before giving up work - some because they wanted to and some because they needed to.

"It seems that accessing pensions before retiring from full-time work is helping significant numbers of people cope with rising day to day living costs and sudden or unexpected events such as redundancy or ill-health. Around 45% of those withdrawing pension cash before leaving work said it was simply to take tax free cash, but a significant minority of about a third are doing it to supplement their income.

"Whether taking pension money before retiring is a good or bad decision depends on people’s individual circumstances, but it’s important to remember that pension money taken and spent before retirement will not be available to provide income later in life."

In line with these survey findings, Just Group has encouraged those considering using pension cash before retirement to get them through a difficult situation to "take a moment" and consider if it is the best option.

The firm suggested checking if state benefits are available to provide extra income, or if people do decide to make any lump sum withdrawals from their pension then to work out how to do so in the most tax-efficient way.

Lowe added: "When times are tough the pension pot can look like an easy solution to an immediate problem – but it’s important that isn’t the default solution. People may well have other options and it’s important they’re fully aware of all the choices available to them and that they understand how decisions made now are likely to impact their lives 10, 20 or 30 years down the line."

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