Income Withdrawal, also sometimes referred to as income drawdown is a means by which a pension fund can provide tax-free cash and, if required, a regular retirement income. Income withdrawal / income drawdown has become the preferred choice for people with pension funds greater than £50,000 who are ready to take the benefits from their pensions. But it is always bust to consult experienced Independent Financial Advisors like Enable of Bishop’s Stortford when you are thinking of drawing cash from your pension.
We at Enable urge caution and have noted that the Pensions Regulator, FSA and HMRC have recently detected an increase in schemes with pension offers that claim to be able to provide loans or release tax-free cash from people’s pension pots before they reach age 55. Apparently known transferred funds amounted to nearly £200m by the end of 2011. Consumers have been warned to steer clear of such schemes and not to be taken in by website promotions, cold-calls or adverts encouraging them to transfer their existing occupational or private pension to a new arrangement in order to access a cash payment or loan.
These schemes usually work by transferring some of the member’s pension fund into highly risky or opaque investment structures, frequently based overseas - with no guarantee that members will get their money back if something goes wrong. By accessing pension savings earlier than the law permits, individuals are likely to be poorer in retirement – and can face substantial tax charges.
No comments:
Post a Comment