Five things to know before accessing pension freedoms

During the first bear market since they were introduced

If you’re just taking your tax-free cash, don’t forget about the remaining 75% of your fund.

“The vast majority of savers cite accessing their 25% tax-free cash as the main reason for entering drawdown. This is understandable given this is one of the main tax benefits of saving in a pension,” Selby said.

“Although accessing your tax-free cash won’t necessarily mean a change in your underlying investments, it is worth using this as an opportunity to review your retirement plans and ultimate goals.

“For example, someone planning to take a regular income after accessing their tax-free cash will likely have a different asset allocation to someone who doesn’t plan to touch the remaining money for 15 years.

“While many will understandably be spooked at the prospect of investing at the moment, it is worth remembering that short-term volatility has historically been the price you pay to enjoy longer-term growth.

“Investors also need to be aware of and comfortable with the risks they are taking. Although investments can go down in value as well as up (as we have seen in dramatic circumstances recently), the value of cash will be eaten away by inflation over time.”

Tags: AJ Bell | Covid-19 | Pension Freedoms | Tom Selby