Pensions – The New World

The world of pensions has changed.  Back in April 2015 the government changed the way we could access our pension benefits, meaning that there has never been a better time to consider your pension.

Savers now have more flexibility than ever in regards to how they can access their pension, so it is vitally important to understand the options available to you.

What you decide to do with your pension is of great significance and will impact upon the rest of your retirement.  Under current legislation you are able to access your pension benefits at age 55.  The options currently available to you are as follows:

• Leave your pension fund invested
• Enter Drawdown, thereby taking some of your money, whilst leaving the rest where it is
• Withdraw cash in one or a number of lump sums
• Purchase an annuity
• Go with a combination of all of the above
• Take your entire pension pot in one go

When considering which is the best option for you, careful consideration needs to be given to the options actually available with your pension provider.  Not all providers offer you access to flexible drawdown and therefore if this is your desired route, consideration will need to be given to transferring to a provider who does.

Likewise improved annuity rates can often be found by shopping around and looking on the open market as opposed to just accepting the rates offered by your provider.  You may also be eligible for an enhanced annuity if you have any health issues or lifestyle factors.

In addition the way in which you take your pension benefits can have significant consequences in terms of how much tax you have to pay.  Remember only 25% of your pension fund can normally be taken tax free, the residue is all taxable.

Investing in pensions has become a much more appealing option for many people in light of the new flexibilities.  However getting the decisions wrong can have a significant effect upon your financial future, therefore we would always recommend that you seek advice from a financial adviser before taking any decisions.

At Prosser Knowles we are able to provide you with independent, professional advice to make these big life decisions slightly easier.

If you would like a pension review or want advice in regards to your retirement options, please click here to request a call back from one of our Advisers.

Written by: Vanessa Coates  – Financial Planning Consultant, Prosser Knowles Associates Limited

Prosser Knowles Associates Limited is Authorised & Regulated by the Financial Conduct Authority. The value of your investment can go down as well as up and you may not get back the full amount invested. The Financial Conduct Authority does not regulate Taxation and Trusts. The information in this document does not constitute advice or a recommendation for any product and you should not make any decisions on the basis of it.  Your home may be repossessed if you do not keep up repayments on your mortgage.