The other potential injustice for those forced to access benefits early is that, if they take a taxable payment, they will trigger the money purchase annual allowance and restrict the opportunity to rebuild their fund when circumstances improve. This is an important consideration, especially for those further from their planned retirement date.
Changing the way one-off pension payments are taxed would be very simple to implement, help people get more money more quickly, and reduce the admin headache for HMRC.
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So while unlikely to be high on the agenda for the new Downing Street team, it could be a quick win to help people at no great cost.
Lisa Webster is senior technical consultant at AJ Bell
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