Do your sums before tapping your pension

Taking full advantage of the new pensions freedoms could land you with an expensive tax bill. Merryn Somerset Webb explains.

"Criminals set to pounce after reform of pension rules," said a headline in the FT last week. Since the huge reforms to pensions were announced, savers "are nearly three times as likely to be contacted by pensions scammers". Pre-budget, 15% of people surveyed said they had been approached by "firms offering to help them access their pension". Post-budget, that number is up to 42%.

But as one of the readers who forwarded this story to me pointed out, the first reaction of an average pension holder is to ask "which scammers"? The ones who have failed to educate people about their open-market annuity options, or perhaps the ones who have kept their savers in overpriced default funds for decades? Rip-offs abound wherever you look in the pensions industry.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.