Some people are being hit with an unexpected tax bill after unlocking their money from a pension pot, according to Citizens Advice.
Others are facing reductions in welfare payments owing to the income received by releasing the funds. The so-called pension freedoms began in April 2015. Since then, anyone aged 55 and over has been free to withdraw as much as they like from their pension pots, subject to income tax.
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A report by Citizens Advice looked into the cases of 500 people who have accessed their pension pots. Of those, 9% had unexpected tax issues and 6% found that their benefits were affected. Nearly twice as many people used the money to pay for daily living costs rather than pay off debts.

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