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UK pension reforms in a nutshell for retirement savers
| Published: | 12 Sep at 6 PM |
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The continuing fallout from the bombshell of the March 2014 Budget Speech pension reforms has confused many retirement savers as to their rights and the best way to plan for their future financial lives.
A fact sheet recently issued by the UK Treasury department is aimed at clearing the fog surrounding the new rules, even although some detailed decisions have yet to be made by Westminster. Eight major points which every retirement saver should know are noted.
Firstly, pensioners can do whatever they please with their pension pots, provided they comply with a number of rules. As much cash as is required can be taken from your pension amount, with 25 per cent tax free and the remainder taxed at the normal tax rate applicable to your salary before retirement.
Only defined contribution pensions, normally workplace or personal, are eligible for the reforms at the present moment. Defined benefit schemes which offer guaranteed payments linked to final salaries are not eligible, but can be switched to a defined contributions plan which benefits from the reforms.
The government is promising free pension advice, although it’s yet to come up with a scheme which meets full approval from experts in the field. Advice should only be taken from advisors who have no connection with annuity or pension companies either in the UK or offshore, and pension providers themselves must help their customers to find the correct advice.
Workers over the age of 55 by April 2015 can access their defined contribution pension pots, and notification of the process will be sent out by all pension providers. The new rules will affect some QROPS savers, with the government at present looking at extending the reforms to cover those involved.
A fact sheet recently issued by the UK Treasury department is aimed at clearing the fog surrounding the new rules, even although some detailed decisions have yet to be made by Westminster. Eight major points which every retirement saver should know are noted.
Firstly, pensioners can do whatever they please with their pension pots, provided they comply with a number of rules. As much cash as is required can be taken from your pension amount, with 25 per cent tax free and the remainder taxed at the normal tax rate applicable to your salary before retirement.
Only defined contribution pensions, normally workplace or personal, are eligible for the reforms at the present moment. Defined benefit schemes which offer guaranteed payments linked to final salaries are not eligible, but can be switched to a defined contributions plan which benefits from the reforms.
The government is promising free pension advice, although it’s yet to come up with a scheme which meets full approval from experts in the field. Advice should only be taken from advisors who have no connection with annuity or pension companies either in the UK or offshore, and pension providers themselves must help their customers to find the correct advice.
Workers over the age of 55 by April 2015 can access their defined contribution pension pots, and notification of the process will be sent out by all pension providers. The new rules will affect some QROPS savers, with the government at present looking at extending the reforms to cover those involved.
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