Pensions  

One in three savers ask about cashing pensions

One in three savers have already “actively inquired” about withdrawing their pension savings next April, deVere’s Reece Fallaize has said.

The move follows the Budget announcement in March, when Chancellor George Osborne said all restrictions on pension withdrawal would be lifted by April 2015.

Mr Fallaize, senior technical adviser at the international wealth manager, warned: “We share the FCA’s concerns that some individuals might not necessarily have the financial literacy to always make the most informed decisions.

“Our advice is to resist, where possible, the temptation to access pensions to avoid the risk of compromising your retirement ambitions.”

Mr Fallaize also said that, although savers were initially attracted to the idea, the majority of those who inquired eventually decide against full withdrawal of their savings, when they learned that only the first 25 per cent withdrawn would be tax-free.

Background

The pension reforms, announced in the 2014 Budget, aim to stop people from buying poor-value annuities that condemned them to receiving low incomes.

In addition, taxation on the rest of the pension pot after the 25 per cent tax-free cash lump sum will fall from 55 per cent to an individual’s prevailing rate of tax – 20 per cent for most pensioners.

The changes will come into effect in April 2015.