Changes to the Pension Annuity
From April 2015, the government plans to allow anyone over the age of 55 to take their entire pensions pot as cash, subject to their marginal rate of income tax in that year.
This is a major change to pensions legislation and provides huge opportunities for more flexible retirement planning for everyone who takes advantage of the tax relief available by contributing money to pension plans in the first place!
Annuities will still be available for those wishing to provide a secure and guaranteed level of income in retirement. But the alternative of Pension Fund Withdrawal, which has been available for some time, now becomes much more attractive because of the flexibility to set your own income level. Previously, a maximum of 120% of what an annuity could provide was the upper limit. This is being raised to 150% with effect from 27 March this year and removed altogether from April 2015.
Other major changes are the option for those with total pension funds of £30,000 or less to take all the funds as a lump sum – the previous limit was £18,000. Also, if you have a number of small pension plans, each with a value of £10,000 or less, these will also be able to be taken as lump sums, irrespective of the total overall value. Previously this limit was £2,000.
If you have previously been skeptical about saving into pension plans now, more than ever before, you should re-consider and come and talk to Nick Lawson about your options and what these changes could mean for you! Tel 01904 655202 or email firstname.lastname@example.org