Ten pitfalls to watch out for if you’re tempted to withdraw money from your pension

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Pension freedoms: Over-55s can make withdrawals from retirement savings whenever they wish

Older people are being urged to ‘stop and think’ before starting or bumping up pension withdrawals to make ends meet.

Soaring household bills are expected to push many over-55s into tapping their retirement fund earlier or taking out bigger sums than planned, but doing so involves significant risks.

Potential pitfalls include forking out too much tax, limiting your ability to pay into your pension in future, and even running your pot dry, warn experts.

One glaring red alert is that government forecasters have just sharply increased their estimate of the tax take from people making pension withdrawals in the year just ended, from £1.2billion to £1.7billion.

This sets expectations of a ‘new normal’ of pension dipping activity as people look to their retirement funds as a bank account to support their day-to-day living costs, says Andrew…

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