Pensions - Articles - Look at the bigger picture says Andy Zanelli

 Andy Zanelli, head of retirement planning, AXA Wealth, comments on projections from HM Treasury that 130,000 people a year will withdraw money from the pensions pots under the new reforms.

 “The findings from HM Treasury that 130,000 Brits a year will withdraw money from their pensions certainly makes for interesting reading. Our own recent research has found that following the Budget, 7 per cent of UK adults would like to take most of the money out of their pension to spend how they want*. However, people need to look beyond the sensationalist headlines that state they can take their entire pension in cash and think instead about their tax position and the bigger financial picture.

 “Income tax should be the first thing people think about: if you withdrew £50,000 from your pension in one go this is likely to push you into higher rate tax. Phasing the withdrawals over two or more tax years could save a great deal of money. Also, if you do withdraw the lot where are you going to keep it? An ISA is a great option, but you can only save £15,000 in a new ISA. Put it in a bank or building society and you could be paying income tax on the interest you earn.

 “People looking to make the most of the new pension rules should seek professional financial advice to ensure they can access their hard earned money without suffering an unnecessary tax bill.”