More than three quarters of company and private pension holders withdraw an average of £24,154 to either give away or spend on luxuries, according to Prudential.
Of those who had taken a lump sum from company or private pension funds, 13% said they had given all or part of the sum to their children with 4% admitting to having given it to relatives and dependents.
Prudential’s research also found that a large proportion used the money to treat themselves, with 17% using the money to buy a new car, 31% using it to fund home improvements and 18% buying a holiday.
Gary Shaughnessy, managing director of retail life & pensions at Prudential, urges people to consider the repercussions of dipping into their pension pot and make use of other investments to supplement their retirement.
“We would urge people to think very carefully about spending lump sums in the early years of retirement and instead encourage them to look at other options, such as investing the money in savings schemes that can be used to supplement their retirement income while maintaining the capital,” he says.IFAonline
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