WHEN you have worked hard all of your life, planned for your retirement and saved into your pension, the last thing you would want to do is trip at the last hurdle.

The freedoms granted to pension savers by George Osborne in 2015 dramatically altered the retirement landscape, providing numerous options for an individual to benefit from their pension savings.

Anyone aged 55 or over with a defined contribution pension is now able to take as much of their pension as they like in the form of cash, to invest (or spend) as they see fit.

Gone are the days where an individual is forced to buy an annuity with their pensions.

However, this is not without consequence and with increased levels of choice and freedom comes a corresponding increase in complexity and risk.

It has therefore become more important than ever to make sure your retirement plans are suitable, appropriate, and help to achieve the lifestyle that you would like to lead in your retirement.

You can save, invest or spend your pension as you see fit, taking your whole pension as cash if you wish, but only 25 per cent of your pension fund will be tax free.

Anything you withdraw over the 25 per cent limit will be taxed at your marginal income tax rate.

If you withdraw a large chunk of your pension savings as a lump sum, make sure you don’t land yourself with a hefty tax bill in the process.

In association with larger withdrawals, there is a small quirk in the system, which means that if you dip into your pension pot, you can be forced to overpay tax and then apply for a refund.

That is an administrative burden that is completely avoidable, and will sap away at the free time you rightfully deserve to enjoy.

This is because HM Revenue and Customs applies an emergency tax code on the first payment released from your pension pot.

If you take a lump sum from your pension you are taxed as if you going to take the same sum each month.

This wouldn’t be too bad if you are withdrawing small amounts regularly, but may be an issue if you were planning to withdraw a larger lump sum. This can result in you paying thousands of pounds too much and then having to claim the tax back.

To ensure you don’t end up paying tax unnecessarily, it may be worth taking a small nominal payment first.

It will be the first payment that will be taxed on an emergency basis as if it is a regular payment.

That way, any tax bill can be minimised.

However, this will depend on your needs and requirements at the time of retirement.

This is only one element of a multi-faceted issue that requires considerable planning, attention and reviewing to ensure the plans you have in place are appropriate and suitable for your needs.

On top of emergency tax codes, the new pension freedoms also have an impact upon what can happen to your pension after death, the level of contributions you make to your pension while working, and the total value of the pension pot you are building up.

If you would like to discuss the pension plans you have in place to make sure they are appropriate, or would like more information about some of the pension changes that have been introduced over the past few years and how they apply to you, visit brewin.co.uk/how-can-we-help-you/pensions-and-retirement, or book a no obligation meeting with one of our highly-skilled financial planners.

Matthew Worton is a portfolio manager at wealth management firm Brewin Dolphin, based in Newcastle.

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin. No director, representative or employee of Brewin Dolphin accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change. The information contained in the Brewin Dolphin Family Wealth Report is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. The value of investments can fall and you may get back less than you invested. The information is for illustrative purposes only and is not intended as investment advice.