Oct 17 2006
A Swiss insurance company has warned financial advisers to properly inform investors of all the consequences of withdrawing money from their pensions.
Winterthur Life has urged caution as pension schemes in the UK inform consumers that it is possible to withdraw 25 per cent of their pension in a tax free lump sum.
The group believes that fears exist among consumers that the government may abolish the option, with the Finance Act 2006 describing it as an anomaly, which may be driving some to rush to make such withdrawals.
Mike Morrison, pensions strategy manager at the company, said: "Pensions are designed to provide a sustainable income in retirement, which might have to last 30 to 40 years in some cases.
"In effect investors will only have 75 per cent of their fund left to potentially produce the same income as 100 per cent would have done."
This week the Financial Services Authority also advised providers to properly inform consumers of the risks involved in lump sum withdrawal from pension funds.
For information on pension plans from a range of providers, please click on our free brochures page.
