Personal finance
n the 2014 Budget, the Chancellor announced a number of changes to pensions, designed to make them more flexible and appealing to ordinary investors. the detailed draft regulations have now been published and provide more clarity on exactly how the new rules will operate in practice when they are introduced in April 2015. Perhaps the first thing to note is that a number of things
won’t be changing. the new legislation only applies to defined contribution pensions, so defined benefit schemes (eg. final salary and career average pensions) will continue to operate as they do today. the ability to make company and personal contributions from pre-tax income and for the pension funds to then accumulate in a largely tax-free environment also remains. the key amendments relate to the options you have at the point you want to get hold of the money you have saved and to the tax treatment of any remaining funds when you die. this article will focus on the first set of changes,
by Ian Thomas CFPCM Director, Pilot FINANCIAL PLANNING.
PENSIONS FLEXIBILITY: NEW OPPORTUNITIES I
with the estate planning implications covered in the next By the Dart. Taking your whole pension pot as a lump sum Anyone over the age of 55 (or who is unable to work because of poor health) will be able to take their whole pension pot as a lump sum. 25% of this will be tax-free and you’ll pay income tax on the rest. Flexi-Access Drawdown this option allows you to take 25% of your pension pot as tax-free cash and leave the rest of your funds invested in a drawdown account. you’ll then be able to withdraw an unlimited amount from this account, either as a regular income or as a series of one-off payments. Again, these withdrawals will be taxed as income. Taking Ad-Hoc Lump Sums Instead of taking a one-off tax-free lump sum, you could choose to just dip into your pension savings as and when you need them. each time you withdraw an ad-hoc a lump
leading the way in financial planning & wealth management
For more information contact Ian Thomas 01803 839 194
ian@pilotfinancialplanning.co.uk
Pilot Financial Planning is authorised & regulated by the Financial Conduct Authority.
www.pilotfinancialplanning.co.uk
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