Should I withdraw my pension savings early to cover the cost of living?

Consumers are under pressure more than ever with the increase to the cost of living. This can make people more vulnerable to financial scams. The Financial Conduct Authority (FCA) have recently reported that 25% of consumers would withdraw from their pension savings to assist with the cost of living. This makes them vulnerable to scammers.

Before you accept any form of financial advice, check that the company or adviser that offers you an initial free meeting is qualified and regulated by the FCA. You can do this by using the FCA register.  Any FCA registered company is then covered by the Financial Ombudsman Service or Financial services Compensation Scheme (FSCS) if things go wrong. A good financial adviser will not add any pressure and will ensure all risks and other potential options are discussed in full prior to any decision being made. 

“The FCA is calling on all consumers to be ScamSmart and check the information on the ScamSmart website”

What can I do to try to avoid a pension scam?

If it sounds too good to be true do your homework. There are three types of pension scams using various tactics that scammers call upon to lure unsuspecting consumers in including

  • The offer of a ‘free pension review’
  • ‘Guaranteed higher returns that on your existing pension’
  • ‘Help to release cash from your pension if you are under 55’ (57 in April 2028)
  • Purchasing an annuity for a cash incentive or bonus (at an inflated price for a limited period)
  • ‘No penalty tax loopholes’ – resulting in being charged as substantial amount of tax (up to 55%)

Pensions are often people’s largest financial asset after their home, which makes them a good target.  Everyone is a potential victim to these scams. Over the years, these have become more sophisticated, and harder to spot. With the use of high-pressure sales tactics offering a pension review with ‘limited offers’ or ‘unusual investments’ and ‘cash bonuses’ not leaving consumers time to think about and consider any alternative options.

Carpenter Box Financial Advisors

Carpenter Box Financial Advisers are regulated by the FCA, and offer a free no obligation initial meeting. We also recently wrote an article as to why you should not stop paying into your pension plan.  We’ll provide cash flow analysis as part of our service. This is to demonstrate how long the rest of your pension would last alongside state pension and any other income that you may have, if you do make a withdrawal from your pension.  We can look at all other assets you have, including your monthly expenditure. We will see what other options you may need to address and discuss any financial concerns that you may have.  This will enable you to make an informed decision in your own time to plan for your financial future.


A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.”

‘The Financial Conduct Authority does not regulate cash flow planning.’