Save thousands in tax at no extra cost

Getty Images

Reinvesting unused pension income into a new pension scheme can save thousands of pounds in tax. Analysis by investment firm Skandia shows that someone with a pension of £150,000 entering income drawdown at at the age of 55 and reinvesting unused income for 10 years could save £28,000 in tax.

Data from Skandia shows that 59% of customers in drawdown are not taking an income. These are people that have taken their tax free cash, but have not started taking an income from the remainder of their pension fund. The problem with this is that if they die, the remainder of their pension fund will be subject to a 55% death tax charge.