ANALYSIS
Getty Images, portrait by Peter James Field
funds, although there may be a tax liability
depending on the amount withdrawn and the
marginal rate the investor currently pays.
The old legal requirement to buy an annuity
– or guaranteeing an income for life – by the
age of 75 will be scrapped, although people
who still want to buy an annuity will be free to
do so. Under current rules, only those who can
show a‘secure income’ of £20,000 or more
from State Pensions, annuities and de ned
bene t schemes are allowed to withdraw as
much as they like from their pension, under
what was known as‘ exible drawdown’.
The proposal is to extend exible
drawdown to everyone afterApril 2015,
regardless of the size of their pension pot or
the income it will buy. Those nearing
retirement nowmay wish to consider
deferring withdrawals until the new rules take
e ect. Remember that annuity purchase is a
once-and-forever decision; after the 30-day
cooling-o period has expired, you cannot get
your money back unless the annuity provider
chooses to allow this.
Payments into all types of pension are
expected to continue to attract tax relief equal
to the individual’s top rate of IncomeTax
– subject to restrictions including the annual
allowance of £40,000 per person.All pension
savers will still be able to take up to 25% of the
fund value tax-free at retirement to spend on
whatever they like.
The changes in the Budget have greatly
increased the planning opportunities
for investors. If you would like any advice on
the impact they will have, please contact your
St. James’s Place Partner.
1 moneyfacts.co.uk, June
2 Barclays Equity Gilt Study
Ian Cowie
writes for The
Sunday Times
and was head
of personal finance at Telegraph Media Group for five
years. He was named Consumer Affairs Journalist of the
Year in the London Press Club Awards 2012. You can
follow him on Twitter @iancowie.
ISAs provide a flexible
addition to pensions
for retirement funding
THE INVESTOR
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