Are you planning to retire soon? There have been a number of changes over the last year to the way in which you will be able to take your pension benefits, with more changes to follow in April 2015.
From April 2015 you will be able to take as much or as little from your defined contribution (money purchase) pension funds. Apart from the tax free cash element of the pension fund (usually 25%) any funds withdrawn will be added to your income and taxed accordingly depending which income tax bands they fall into (if taxable, the tax rate could be 20%, 40% or 45% or a combination of these rates depending on the amount withdrawn).
When the new system is in place, the government will not prescribe a particular product which you will need to purchase or invest in to access your pension savings. It will be up to you to decide how you want to access them, either as a lump sum or through some sort of financial product e.g. annuity or similar.
Post April 2015 changes will see more choice as new more flexible products to support your retirement are introduced.
Further insight is provided in this PDF guide – A Guide To Your Retirement Options
A further Blog update to this Guide will follow.
Duncan R Glassey
Senior Partner – Wealthflow LLP
This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted.