- Posted by: Joyce Watson MS
- Category: Feature
UNSCRUPULOUS companies are enticing increasing numbers of pension savers to access their savings early, Assembly member Joyce Watson has learned.
The practice known as ‘pension liberation’ has significant tax consequences. HM Revenue & Customs are highlighting the dangers of accessing pension savings early and taking enforcement action against the companies involved.
strong>The Labour Mid and West AM said:
“Registered pension schemes receive various tax reliefs that can add up to over half of an individual’s savings. Normally a pension cannot be accessed before the age of 55. Pension liberation, where benefits are paid early, can incur substantial tax bills as well as huge management fees. This can result in an individual losing most or all of their pension savings before retirement.
“HMRC must take firm action against any abuse of pension tax relief – but is far more important that people recognise the dangers and don’t put their retirement savings at risk in the first place.”
To combat the practice of pension liberation, HMRC has changed its pension scheme registration rules. It has also produced a factsheet highlighting the tax consequences of pension liberation for savers. Advice and guidance can be found at www.hmrc.gov.uk/news/pensionliberation.htm