Most older people unaware they can access 25% of their pension pot tax-free

dailyrecord.co.uk:

More than two in five (43%) over 55s are not aware they can take 25 per cent of their pension pot tax-free, new research from Standard Life, part of Phoenix Group, reveals, highlighting a lack of knowledge which could result in people making ill-informed decisions when they access their pension savings.The majority of those approaching the age when they can begin to access their pot are similarly unaware, with 52 per cent of those aged between 50 and 54 oblivious about this rule too.

Standard Life’s research also found that among the 57 per cent of over 55s that do know they can access some of their pension without paying tax, 21 per cent have done this already, while 9 per cent plan to do so in future.Most over 55s that have taken or plan to take their tax-free lump sum did or will do so at the point of retirement (69%).

In comparison, 16% have made or plan to make withdrawals at different points in retirement.Commenting on the findings, Dean Butler, Managing Director for Retail at Standard Life, said: “When the time comes to take money out of your pension pot, it’s important to feel confident about your different options, and this includes understanding that you’re entitled to take 25% tax-free cash from your pot, either in one go or at intervals.“Taking a tax-free sum from pension savings is a stage a lot of people look forward to, however, there are some key things to consider about how you take this - for example taking it all in one go or splitting withdrawals into chunks over a period of time - and the implications and benefits involved.”He added: “Whichever way you plan to take out your pension money, you need to think about tax, as there may be income tax to pay on any money you take out over your tax-free