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Female Focus
Pension freedom reforms are less than a month away and many retirees are eagerly awaiting the opportunity to unlock savings built up over decades.
Pension freedom - triumph or disaster in the making? How to enjoy the big rewards, and make sure it doesn’t go horribly wrong.
But although the big pension overhaul could be positive for some, there is creeping concern some people at least will be tripped up by the new rules and make mistakes that cost them dear. WHAT IS PENSION FREEDOM? ‘Pension freedom’ reforms will give people greater power over how they spend, save or invest their retirement pots from next April. Key changes include removing the need to buy an annuity to provide income until you die, giving access to invest-and-drawdown schemes previously restricted to wealthier savers, and the lowering of a 55 per cent ‘death tax’ on pension pots left invested. Also, savers won’t be limited to one chance to take a single tax-free lump sum worth 25% of their pension pots, with the rest taxed as income afterwards. Instead, Chancellor George Osborne has announced that people will be able to dip in and make as many withdrawals as they want, each time getting 25% tax-free and the rest taxed like income. The changes apply to people with ‘defined contribution’ or ‘money purchase’ pension schemes, which take contributions from both employer and employee and invest them to provide a pot of money at retirement. Yet big and serious risks are looming, like fraudsters stealing people’s life savings, baffled retirees paying far too much tax, and the possibility of some treating their savings like a cash windfall and blowing them too fast. Most recently, the chancellor announced his plans (in April 2016) to allow pensioners who were previously forced into purchasing an Annuity the option to cash out, swapping their Annuity for a cash lump sum. Choice, freedom and opportunity will be welcomed by a lot of pensioners. For others it will cause confusion and may lead to costly mistakes. Always seek professional financial advice to ensure your financial future is safe. Tracy Storer, Private Client Adviser, AES International. Call 966 848 960, mobile: 693 107 044 or email:
tracy.storer@
aesinternational.com.
HOMES,
GARDENS & LIFESTYLE SHOW
10th & 11th April see centre pages.
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