One in four over-55s don’t realise they have to pay tax on pension savings

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.