More than one in four (27%) don’t know they have to pay tax on their pension savings if taken as cash
5 Nov 2018
New research by Legal & General has found that more than one in four people approaching retirement don’t know that they have to pay tax on their pension savings if they take the money as cash. In a survey of more than 2000 over-55s, Legal & General found that 27% of people think they can access their pension pot tax-free, potentially leaving them facing higher tax bills than they had planned for.
People also don’t want to risk their pension savings for a better return in retirement. Over three-quarters of respondents wouldn’t take up an investment in later life that would double the money they receive in retirement if it also meant the level of risk was to double. Almost half (46%) of over-55s wouldn’t take any risk with their pot and 73% would avoid any ‘big risks’ to their pension. However, recent figures from the Financial Conduct Authority found that a third of people recently investing their pension funds did not know where their money had been invested.
Emma Byron, Managing Director, Legal & General Retail Retirement Income: "Making retirement planning easier to understand and supporting consumers with good advice is crucial. The guidance and information people use needs to be clear and jargon-free, and we must engage customers more and encourage them to take financial advice."