Pensions

Look before you leap into income drawdown | Money

Worrying numbers of people are accessing funds without advice

Income drawdown plans have become popular, but require savers to manage their finances carefullyGETTY IMAGES

It was billed as “pensions freedom”, but is there a sting in the tail of the most radical overhaul of the UK’s retirement savings system in a generation? The Financial Conduct Authority (FCA) says that thousands of savers taking advantage of the reforms that came into force in 2015 are at risk of financial harm or huge tax bills because they are not taking independent financial advice.

The financial watchdog is especially concerned about the large number of savers who are opting for income drawdown plans when cashing in their pension funds. Drawdown allows the over-55s to take as much or as little income out of their funds as they like, when they like, while leaving the rest of the pension pot invested.

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