Pension savers given 'stop and think' warning over withdrawing cash
manchestereveningnews.co.ukSavers are being issued a stark 'stop and think' warning from pension experts about the potential pitfalls of withdrawing cash from their retirement funds.
AJ Bell's pension specialists have highlighted that April, May, and June are the "peak" months for pension withdrawals, as individuals look to capitalise on the new tax year.
However, they caution that there could be serious long-term "consequences" to such actions, which might include reducing your annual allowance, affecting your inheritance, or even exhausting your retirement savings prematurely.
Tom Selby, AJ Bell's director of public policy, emphasised the importance of careful planning to the Mirror: "The start of the tax year is traditionally peak pension withdrawal season for people with defined contribution (DC) pensions, with hundreds of thousands of savers dipping into their retirement pot many for the very first time in order to take advantage of a fresh set of income tax allowances." READ MORE: HMRC last minute pension changes branded a 'shambles' as Lifetime Allowance ends He continued: "This can be a perfectly sensible thing to do provided you have a well-thought-through withdrawal plan." Tom pointed out that the soaring inflation over the past couple of years has led many to dip into their pension savings for financial relief, and with a significant rise in mortgage payments on the horizon, coupled with other expenses, individuals might be tempted to do the same this year.
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