PLANNING YOUR RETIREMENT

Since 6 April 2015, anyone aged 55 or over has been able to take their entire defined contribution pension fund however they want…

Radical government changes to the way you draw your pension now allow plan-holders to draw down as much or as little of your pension as you wish, at any time.  This expanded choice means you can even take it all as cash! However, whilst the new pension legislation creates more choice, it can also bring with it more risk…

Making the right decisions for your future can seem a daunting prospect, so it makes sense to speak to a qualified, pensions specialist to ensure you are making the most of your money and that you don’t pay any more tax than you have to Harris Begley take pride in offering a personal service that takes your individual circumstances into account.

Get in touch for a free, no obligation consultation to discuss your pension and plan for your future on 01736 366550 or email enquiries@harrisbegley.co.uk

The key options arising from the 2015 government pension legislations:

The first 25% of your pension pot will be tax-free either as one lump sum or as the first 25% of multiple lump sums.  The remaining 75% would be taxed at the person’s marginal rate. You need to be aware that taking beyond 25% as cash could generate a sizeable tax bill and possibly push some into a higher income tax band.

1. Uncrystallised Funds Pension Lump Sum
These funds are ‘uncrystallised’, as they have not yet been used to pay a scheme pension, buy an annuity, or designated to a flexi-access drawdown fund.  As it stands, your pension pot would remain as currently invested, or can be taken partly, or all, as cash.

2. Annuities
Historically, three-quarters of the 320,000 or so people that retire each year opted for an annuity, which offers a regular guaranteed income. For many, this certainty of payment may mean that it’s still the best option. (Source: HM Treasury, March 2014)

3. Flexi-access Drawdown
At the other end of the scale are ‘drawdown products’, which could potentially offer a better return but do come with a higher degree of risk, as you’ll still be investing in the stock markets, etc.

4. A Combined Solution
The likelihood for many, will be to opt for a mix of immediate cash, annuity and flexi-access drawdown – thereby meeting current needs, delivering a guaranteed income for life, yet also leaving some funds invested in the hope of future growth.

Whatever you opt for, it makes sense to take expert advice…

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

HM Revenue & Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.