Pension Withdrawals Making Sense

Research* has revealed that one in five over 55’s with a private pension withdrew a lump-sum during 2019, although the study does suggest that, for many, this was not a financially sensible course of action.

Stash The Cash
The most popular reason for accessing pension wealth was to put money into a savings account, with one in four respondents doing so. Around one in five people who withdrew money from their pension, spent the proceeds on home improvements.

Tax Implications
At first glance, the research appears to imply a sensible approach to pension withdrawals. However, in reality, shifiting a taxed lump sum from a tax-efficient pension simply to place the proceeds on deposit makes little financial sense. This is partly due to the potential tax bills, but also relates to inheritance rules which means most people would be better off leaving money in a pension until they need the cash for income or specific spending requirements.

Seek Advice
It’s clearly always always essential to take professional advice before making any pension related decisions, particularly in the current economic climate. So, if you are considering accessing your pension soon, GET IN TOUCH – we will help you make the best decision for you.

*Canada Life

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The above article is purely for information purposes and does not constitute advice.

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