Stick to withdrawal rules

Regulators warn thousands of people are being tricked into breaking the pensions rules by rogue advisers. David Prosser explains.

In this era of pensions freedom, it's easy to see why people would think of their pension plans as bank accounts they can dip into at will. But while people now have much greater freedom in how they use their savings once they retire, those who break the rules face hefty tax penalties and regulators warn thousands of people are being tricked into doing just that by rogue advisers.

Pensions legislation defines "authorised payments" from private pension schemes very clearly, whether you're putting money into a company scheme or an individual arrangement such as a stakeholder pension or a self-invested personal pension (Sipp). You will almost never be able to access these pots until you reach age 55 and your money must be used to provide retirement income either as a pension, or as a lump sum benefit paid when the pension begins.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.