Pension tax warning

WOrKErs who cash in final salary pensions risk being hit with huge tax bills, experts warn.

Firms are desperate to ditch the gold-plated schemes as they are expensive to run. savers are being offered big cash payouts if they give up modest incomes.

But this could bust the £1million lifetime saving limit for pensions, with savers facing a 55 pc tax charge on the excess.

A client of advisers tilney was offered £850,000 to give up £17,000 of annual final salary income. that could have caused the worker to bust the cap when combined with pension pots from previous employers.

Gary smith, a financial planner at the firm, says: ‘it is important people who decide to transfer out of final salary pension schemes check whether they could breach the allowance.’