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Beverly Chandler

Portus reveals widespread ignorance on new pension rules

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Research from employment benefits consultancy firm, Portus, reveals that 53 per cent of savers are unsure about the tax rules surrounding taking cash out of pensions and many employees are still unaware of the legislative changes providing greater freedom over how they use their pensions. 

Worse news is that those who think they know are the most confused, with one in 20 believing all cash is tax-free. Some 9 per cent of employees believe that any cash you take out of your pension is taxed, and 5 per cent believe it is all tax free. Another 6 per cent wrongly believe that you can take 25 per cent of your pot tax free every year.
 
 Just 54 per cent of those aged 55 to 64-years-old are aware that they can take a 25 per cent tax-free lump sum and then potentially face tax on their funds while 31 per cent admit to being unsure.
 
Portus Consulting Commercial Director Steve Watson says: “Pension freedoms have been widely welcomed in that it gives people more control over how they use their own money.  However, our research shows that more needs to be done to educate people about the changes, and employers should take a lead.”
 
Portus has recently launched a new service called RetirePort, which aims to help employees understand their total retirement planning and shift the focus of workplace guidance and education from simply looking at pension savings. It has been launched specifically in response to pensions freedom enabling employees to take pension cash at 55-plus however they want subject to marginal tax rates.
 
RetirePort, provides individual guidance to employees and an online portal where they can track where they are with their pension funding alongside other investments, including property to provide a total retirement planning overview.
 
Employees can use the portal to outline scenarios and the impact on how they decide to take retirement income. They retain access to the service if they leave their job.
 
The firm says that employers benefit by offering enhanced guidance and financial education to staff which will improve engagement with retirement planning. Portus research shows 36 per cent of workers want their employers to provide support on retirement planning rising to nearly half (46 per cent) among those aged between 35 and 44.
 
The wider service alongside the online portal offers bespoke workshops for employers who can decide when and where the sessions are run as well as general and open workshops for a range of companies. Initially workshops will be run in London but will be offered across the country as the service expands.

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