It is thought that 60 per cent of people approaching retirement are unaware of the significant changes to the pension system that will come into action in spring 2006.

A survey of people aged between 45 and 60 revealed that six out of ten of them do not know how these changes will impact on their pension funds, reports www.50connect.co.uk.

New, more flexible pension rules are primed to come into effect on April 6 next year, on what has been dubbed “A-Day”.

These will provide greater tax relief and flexibility, while placing a cap on the amount of money that can invested tax-free.

Dale Lovell, money editor at 50Connect, said: “We are not surprised that sixty percent of over-50s have no idea how pensions A-Day might affect them.

“The new changes could come as a big surprise to many saving for retirement because where considerable pension benefits have already been built up, A-Day legislation could lead to tax charges as high as 55p in every £1 [for those with more than £1.5 million in their pension pots].”

He added: “The lifetime limit takes into account all types of pension savings over a person’s lifetime. Private, occupational or voluntary contribution pension schemes are all included, so many savers could find themselves at risk of additional taxation without even knowing about it.”

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