Tax problems with pension freedom

Tax problems with pension freedom

New pension freedoms bring their own set of problems, and some people have been slapped with unexpected bills after unlocking some of their money from their savings.

This is according to Citizens Advice, who add that some people are also looking at reductions in welfare thanks to the income they're getting after they release funds from their pensions.

CA's report investigated cases from 500 people who had utilised the new freedoms, and of the people they spoke to, 9% had unexpected issues with tax, while 6% saw that their benefits had taken a hit.

The numbers may be a small percentage, but as more people open their pensions up, this should be seen as a warning shot.

"The pension freedoms are popular with consumers but some people are experiencing unexpected losses," said Gillian Guy, chief executive of Citizens Advice.

"The changes are giving huge numbers of people the choice of how to access their retirement savings, offering them more options about how to use the money to best fit their lives."

"As people's pension choices become more complicated government and providers need to continue their work to promote free Pension Wise guidance, ensuring people are fully informed about their options as they move from work into retirement."

Last year, we wrote a guide on things to look out for regarding pension freedoms, which has a load of good advice in it.

Have a look.

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