Majority still confused over pension tax rules

Worryingly, 9% of employees believe that any cash you take out of your pension is taxed, and 5% believe it is all tax free. Another 6% wrongly believe that you can take 25% of your pot tax free every year.

Just 54% of those aged 55 to 64-years-old are aware that they can take a 25% tax-free lump sum and then potentially face tax on their funds while 31% admit to being unsure.

Portus has recently launched a new service called RetirePort, which aims to help employees understand their total retirement planning. It has been launched specifically in response to pensions freedom enabling employees to take pension cash at 55-plus however they want subject to marginal tax rates.

RetirePort provides individual guidance to employees and an online portal where they can track where they are with their pension funding alongside other investments, including property to provide a total retirement planning overview.

Portus Consulting Commercial Director Steve Watson, said:

“Pension freedoms have been widely welcomed in that it gives people more control over how they use their own money. However, our research shows that more needs to be done to educate people about the changes, and employers should take a lead.”