Pension and Retirement
Make sure you can afford tomorrow
Factor in Peace of Mind
Pension and RetirementFactor in peace of mind
Planning for tomorrow? Make sure you can afford tomorrow.
We all talk of retirement and the great time we’ll have, but how are you going to fund it?
Have you got existing pension schemes in place? Do you know what they are doing for you?
What investment funds are your schemes in? Are they any good?
What will they be worth when you retire?
How does the recent changes ‘pension freedom’ affect you?
From April 2015, the whole pension landscape has undergone major and far-reaching changes. Anyone retiring now has far greater flexibility to access their cash than ever before. The major changes are:
- Flexible access to pensions from age 55 (57 from 2028)
- 25% tax-free amount will no longer have to be taken at once on retirement; smaller amounts can be taken over time, each with 25% tax free
- Pension drawdown restrictions relaxed
- Final salary pensions can be switched to defined contributions (but transfers from unfunded public sector schemes not allowed)
- Death benefits paid to beneficiaries on death before age 75 will be completely tax free
- Death benefits after death over 75 subject to 45% income tax in 2015-2016 and beneficiary’s marginal rate thereafter
All this new freedom brings with it added personal responsibility. Faced with a bewildering array of potential opportunities, it can be hard to know if you have made the right choice. Whilst taking a large lump-sum can seem like an enticing prospect, you may inadvertently find that you have pushed your income into a higher tax bracket and could face a large tax demand.
You will need to ensure that you manage your Pension and Retirement cash carefully to ensure that you don’t run out of money in your later years. You no longer have to take an annuity, however you may wish to buy one with part of your pension fund in order to guarantee a regular cash sum to pay for living expenses.