Reinforcing the need for this advice, more than half (59%) of those planning to take a quarter of their pension pot as a lump sum said they would reinvest it into a savings account or an ISA, suggesting a possible lack of understanding of the potential tax benefits of staying invested in their pension.
Reinvesting a lump sum from a pension into an ISA for example would mean that consumers would use up their annual ISA allowance without gaining any other tax advantages and could expose themselves to potentially costly inheritance tax liabilities.
Alistair Wilson, Head of Retail Platform Strategy at Zurich said:
“It's reassuring to see that consumers will be looking to advisers for professional advice as they approach retirement. This is a complex area and so advice is key, whether it's for those looking to make their income work as efficiently as possible or for wealthy clients seeking to gain from IHT planning. Consumers who make their own decisions without expert advice, risk exposing their capital to unnecessary tax.
“The recent budget announcements and increased flexibility of accessing pension savings give people a great amount of personal control and freedom around how they manage their retirement. However, it's important that support is available to consumers so they can make the most of the new reforms.
