V
ery few of the frequent changes that take place in the
world of personal finance – many of them imposed
by governments and regulators – make much of an
impact outside the industry itself. But the changes
in the pension rules, described under the heading
‘Pensions Freedom’ and implemented at the start of the current tax
year, are an exception. For those aged 50 or over, the new rules have
quite rightly been described as the most important changes to the
pension regime for decades: they will, however, be equally significant
for those in their 20s, 30s and 40s, too.
The reason is simple: the changes are potentially too important to
ignore and, unusually for legislative changes, the implications could be
positive for a significant number of people.
The changes affect what you can now do with the pension savings
you’ve accumulated over the years.There are, of course, caveats.
The new rules apply only to one type of pension, known as‘defined
contribution’ schemes, and not the final salary schemes common in the
public sector and some companies.While it may be possible to covert a
final salary scheme into one which qualifies for the Pensions Freedom
benefits, these schemes can carry significant other benefits and it is
essential to seek advice before taking such a major step.
It’s also important to understand that, while the freedoms may
generally be favourable, there are some potential tax drawbacks,
along with some other restrictions, that must be taken into account
before making any decisions. First, the good news: as far as the essence
of Pensions Freedom is concerned, the clue is in the name.The key
milestone is your 55th birthday – because from then onwards there
will be complete freedom to take as much or as little of the money
in your pension fund as you like, although your choice could have tax
repercussions, described in more detail over the page.
a little
knowledge
cangoa
longway
Pensions Freedom is good news, with more
retirement opportunities than ever before.
However, there is a range of complex
considerations to take into account first
By Lucian Camp
Now you can take
some money from
your pension pot
to tide you over
06
|
THE INVESTOR
IN YOUR INTEREST
PENSIONS
