Pension warning as accessing savings may ‘significantly’ impact growth as inflation soars | Personal Finance | Finance

She continued: “Maintaining funds within your pension pot can reduce the level of inheritance tax your beneficiaries may pay, if your estate exceeds the nil rate band thresholds.

“Under current legislation your pension will not be subject to inheritance tax (in a vast majority of circumstances), therefore you may wish to consider depleting other assets outside a pension first, such as using savings and investments.

“Remaining pension pots can be passed to beneficiaries to spend tax-free, if the pension pot holder dies before their 75th birthday, or subject to their marginal rate of income tax should death occur after age 75.”

Additionally, even though the first 25 percent of any withdrawal is free of tax, the remainder will be added to someone’s total earnings for that year and may be subject to income tax.

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