NEXT month, April the Government will announce the final rules about how you will be able to access your personal pension from the age of 55 onwards, writes Robert Little of Bob Little, Chartered Financial Planners,

This is expected to signal the end of "compulsory" annuity purchases and will give you more freedom to choose how and when you take your benefits. However, these changes are not without potential problems. In this article I have set out some of the pitfalls you should steer clear of.

Firstly, commentators are predicting that many new pensioners will "blow" their pension savings, which were intended to provide a retirement income. One government minister famously cited a Lamborghini sports car as an example of how the cash might be spent. This could increase reliance on the state in the future.

Secondly, fraudsters and unregulated companies are expected to take advantage of the potentially confusing new rules by exploiting retirees. You can read more about this issue at: www.thepensionsregulator.gov.uk

Many of these companies will contact potential customers by phone and out of the blue. To protect yourself you should be very wary of any unsolicited phone calls relating to your pension. If a firm gets in touch with you it should be regulated by the Financial Conduct Authority (FCA). It’s a good idea to ask for the firm's FCA reference number and check this number on the official FCA register. You can also phone the FCA helpline on 0800 111 6768 if you are at all unsure.

Thirdly, more people are expected to fall into an inheritance tax trap. This is because pensions are normally not counted as part of your estate until you withdraw money from them. So any lump sums taken from your pension will increase the value of your estate and could push you closer to the inheritance tax threshold.

Finally, an issue that is expected to affect more people than the three previous ones – many pensioners could face a shock income tax bill. You can generally draw up to 25 per cent of your fund value as a tax-free lump sum, but any withdrawals from the remaining pot will be added to your other income (such as earnings or other pensions) and will be taxed accordingly. In my experience, many people misunderstand this concept, with some believing they can take their full fund value tax-free under the new rules. So before you make any pension withdrawals, make sure you are fully aware of the tax consequences.

I always tell my clients that taking pension benefits is one of the more complex matters we deal with on a daily basis. However, this is not necessarily a bad thing because it means you have lots of choice and flexibility available to you. It is important to remember that the decisions you make when you retire will affect you and your family for the rest of your life (and beyond), so you should take plenty of time and carefully consider all your options.