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Retirees warned not to rush to access savings


People with pension savings been warned not to immediately rush to access their money, or “dash for the cash” when the new pension reforms come into place in April.

The new pension rules mean that it will be easier for those approaching retirement to take cash from their pension pot. Consumer group Which? has warned savers to be aware they could be hit with a very large tax bill if they choose to withdraw their savings all in one go.

The Pensions Advisory Service (TPAS), which runs the Pension Wise guidance service, has also warned those approaching retirement that tax implications will be a major issue when accessing their savings. Any lump sum of cash withdrawn from a pension will be treated as income. Large amounts could push individuals into a higher income tax bracket, taking a big chunk out of their lump sum.

Richard Lloyd, executive director of Which? said:
"The government's reforms will offer people welcome flexibility over what to do with their savings.
"But people approaching retirement are not going to turn into financial experts overnight and so, with more options on the table, it is vital people take their time to make the new freedoms work for them."
Huw Evans, director general of the Association of British Insurers has said that people should not treat April 6th as a deadline to act. He said:
"With greater pension freedoms and flexibility comes more responsibility to make the right choice. Don't be tempted to dash for the cash, but take time to consider carefully your options - especially as rising life expectancy means we can expect a longer retirement."

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