More than half of the general public are still unsure about what the tax rules are when it comes to taking cash out of pension, new research has found.

A recent survey by Portus, an employment benefits consultancy firm, found 53% of people were unsure.

It also revealed that a significant number of people wrongly believe they do understand it.

Some 9% of employees believe that any cash you take out of your pension is taxed, and 5% believe it is all tax free.

Another 6% wrongly believe that it is possible to take 25% of your pot tax free every year.

Just 54% of those aged 55 to 64-years-old are aware that they can take a 25% tax-free lump sum and then potentially face tax on their funds, while 31% admit to being unsure.

The findings follow the recent report from the Work and Pensions Committee 'Pension Freedom guidance and advice', which concludes that the Pension Wise website is "not fit for purpose." (PFI 22 October 2015)

Steve Watson, commercial director at Portus Consulting, said: "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 that aims to help employees understand their total retirement planning and shift the focus of workplace guidance and education from looking at pension savings.

RetirePort, the new service, 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.

Portus says it 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 also use the portal to outline scenarios and the impact on how they decide to take retirement income.

First published 19.11.2015

Lindsay.sharman@wilmingtonplc.com