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Quarter of over 55's unaware of pension tax

"More than a quarter of people approaching retirement are unaware of the tax charge they will face if they withdraw their pension savings as cash," said Afford Bond Partner, Paul Edwards this week.  In fact, pension withdrawals are only tax-free for up to 25% of the amount withdrawn, with income tax due on the other 75%.


According to a survey of more than 2,000 over-55s by Legal & General, 27% believe they can access their pension pot tax-free, while 21% say they would be ‘shocked' at having to pay tax on it.


Savers were also reluctant to take risks with their pension pots. Nearly half (46%) don't want to take any risk at all, and 73% would avoid any ‘big risks'.


However, figures from the Financial Conduct Authority show that a third of people who recently invested in pension funds were not sure where their money had been invested. Few of us spend much time thinking about our pensions and retirement planning, especially when every day life is so busy, but planning ahead and taking advice from experienced tax experts, like those at Afford Bond, is essential.


"Leaving important decisions about later life to the last minute could potentially leave you poorer in retirement," said Legal & General.


Don't put your hard earned pension pot at risk.  Contact Paul.Edwards@affordbond.co.uk  for expert tax and accounting advice,  or complete the contact us form on our website www.affordbond.co .uk/contact