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Warning over triple tax hit on pensions

Published 07/04/2015

Savers have been urged not to rush into new freedoms allowing them to access their pension pots amid warnings of a
Savers have been urged not to rush into new freedoms allowing them to access their pension pots amid warnings of a "triple tax whammy"

Savers have been urged not to rush into new freedoms allowing them to access their pension pots amid warnings of a "triple tax whammy".

The new rules mean the 320,000 people who retire each year with a defined contribution pension no longer have to use their pot to buy an annuity and instead can take it in one go or use it as a bank account.

But concerns have been raised amid fears some may fall prey to scams, run out of cash, or fail to see the tax issues.

The Government's free Pension Wise service is offering guidance, with Pensions Minister Steve Webb saying the Department for Work and Pensions had trained more than 300 staff to deal with queries.

Urging against any hasty decisions, he said: "We want people to make informed choices. This isn't a mad scramble. If you are that person with that large pension pot, you will pay a hell of a lot of tax."

That warning was echoed by Ros Altmann, the Government's business champion for older workers, who said the best advice she could give people was "do nothing". She also claimed some would be hit with a "triple tax whammy" if they take their money out - on withdrawal, on the new investment and by the loss of the tax-free status the money had in the first place.

"Leave it... there are huge benefits from having the money in the pension," she added.

Belfast Telegraph

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