As you will probably be aware, we are in the middle of what George Osborne has described as the “most far-reaching reform to the taxation of pensions since the regime was introduced in 1921”. From this month, the rules have changed radically about how and when you can take money from your pension pot.
Once you reach 55 you will now have more choices than ever before about how to take your pension. And more choices mean more decisions to make, decisions that will affect the rest of your life.
Depending on your current pensions arrangements, what could you do?
- Use your pension pot to buy a regular income for the rest of your life, whilst also taking up to 25% as a tax-free cash lump sum.
- Keep your money invested and have access to it when you need it – and take up to 25% as a tax-free cash lump sum.
- Take some or all of your pension pot as a cash lump sum, as and when you choose, but do remember that any lump sums (after the initial 25% tax-free) will be liable to income tax”.
On average, we spend around 20 years in retirement (Source: Money Advice Service) so are you confident that you could make your pension last that long? Choosing exactly what to do with your pension pot is a decision that will affect what you can do in retirement – and what you can’t.
Pensions planning is a complex area and one where you should always take the professional advice of a fully qualified independent pensions advisor. Please call Marchwood IFA now and ask us to review your pension arrangements. We can help you make the right decisions to help you achieve your retirement goals.