Pension Freedom Or Liberation?

Pension freedom is a GOOD thing. The change in law from 6 April 2015 means that members of defined contribution pension schemes who are aged 55 or more should be able to draw what they want from their pension schemes. But “pension liberation” is a BAD thing. This is when scammers use confidence tricks to separate taxpayers from their pension savings, and the taxpayer has to pay high charges and tax penalties.

Can you tell the difference?

If you are thinking about taking funds from your pension plan, you need to think carefully about all the implications. The Government has set up a website:, which provides basic guidance on the six steps to take before accessing your pension savings. There will also be free face to face meetings, and telephone support, where you can learn about your options.

If you want to invest your money outside your pension fund, you should take advice from a qualified financial adviser who is registered with the Financial Conduct Authority (FCA). The Money Advice Service website (also Government backed) has some good tips about how to choose a financial adviser.

Beware of taking large sums out of your pension fund in one go, as this may push you into the 40% or 45% tax bands. We can help you calculate how much tax you will have to pay when you access your pension savings.

Taking flexible income payments from your pension scheme is an irreversible process, you can’t put it all the money back into the pension scheme if you change your mind. You may also be restricted to making pension contributions of no more than £10,000 per year, rather than the current cap of £40,000 per year. A withdrawal of tax-free cash from the pension scheme, or a transfer of funds into a pension annuity does not count as a “flexible income payment” for this purpose.

The decision to start drawing your pension benefits should not be taken lightly, or without qualified advice.

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