The new rules will, almost allow people to use their company schemes like bank accounts, from age 55, they will be able to dip in and out of their money as they like. All pensions, even under today's rules, allow 25pc of pension money to be taken free of tax. Under the current rules most people have to take their 25pc tax-free pension lump sum within 18 months of them becoming eligible for their pension income. The Treasury also plans to remove this restriction.
What will this means for the future is that savers could take monthly payments from their pension where 25pc was tax free, with the balance taxed at their usual income tax rate. The benefits would be that people could take less of their pension early therefore leaving more invested. This would mean there would be more time for the whole pot - including the 25pc tax-free portion - to grow.
People will still be allowed to take all their tax-free money as a 25pc lump sum if they choose, or, if they decide to take it in uneven chunks (for example if they wanted to take a 15pc lump sum in their first year of retirement, followed by 3pc tax-free lump sums thereafter), they can arrange for their pension pot to be split in two. If you need help making sense of your pension options Enable’s IFA’s in Bishop’s Stortford will be able to help.
Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE
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