Cash point

The Government has confirmed the drop in the amount savers can pay into pensions once they have accessed pots under the pension freedoms.

The Money Purchase Annual Allowance – the maximum amount you can pay into pensions after accessing savings – has been reduced from £10,000 to £4,000 per year and is effective from this tax year, which began on April 6, 2017.

It will hit people dipping into savings early who want to continue making contributions up to their actual retirement.

Retirement Advantage research shows that almost two-fifths of those who have accessed savings have continued to pay into a pension, along with contributions from their employer.

Worryingly, two-thirds didn’t know about MPAA.

Andrew Tully, pensions technical director of Retirement Advantage, said: “One of the key pension freedoms benefits was the ability to phase withdrawals to fit in with a more flexible approach to later life.

“Now the freedom to withdraw funds from age 55 needs to be accompanied by flashing warning lights.”