Becoming an owner of a Lamborghini is a real possibility under the new pension rules. This light hearted prediction by the pensions minister Steve Webb, that retirees would be blowing their retirement savings on expensive toys, has not really materialised. Judging from experience and conversations I have with my clients, most people tend to be more sensible and use their newly available funds for well-planned and financially sound decisions such as paying off mortgages early, taking holidays of a lifetime or helping their children in some way.
Over the last few years Britain’s pension system has undergone a huge change in how we all retire and the choices are no longer as simple or certain as they have been historically. Until recently, most retirees used a mixture of company pensions and annuities to provide a fixed income that they could plan their future retirement around.
With recent government changes to pensions rules people have more choice, access and flexibility over how they use the money they’ve saved for retirement.
So, what has changed?
Historically, three in four people accessed their pensions through either a guaranteed retirement income from company schemes or bought a guaranteed lifetime annuity income. Currently, it is predicted that this number will drop to one in five.
The new pensions freedoms implemented in 2015 mean, that there is no longer a requirement to buy an annuity and they now allow more flexibility in terms of how you take the money. In very simple terms it is now possible to withdraw up to 100% of your personal pension fund, subject to your highest marginal rate of income tax, personal allowances and impact on benefits you may receive.
It is now also possible under the new rules for pension savings to be passed on to children or beneficiaries potentially free of tax.
Things to Consider
Mainly, how to make my pension pot last a lifetime?
What is a sustainable level of drawdown which can be taken annually and most importantly, is it tax efficient?
These options can be answered through a careful financial planning process and understanding of your personal circumstances and future plans. Wherever you are on the retirement spectrum, either currently saving for retirement or considering your retirement options please contact us for a free, informal chat.
Mark Chiva, Independent Financial Adviser,
mark.chiva@haverfords.co.uk
01733 308 666
Over the last few years Britain’s pension system has undergone a huge change in how we all retire and the choices are no longer as simple or certain as they have been historically. Until recently, most retirees used a mixture of company pensions and annuities to provide a fixed income that they could plan their future retirement around.
With recent government changes to pensions rules people have more choice, access and flexibility over how they use the money they’ve saved for retirement.
So, what has changed?
Historically, three in four people accessed their pensions through either a guaranteed retirement income from company schemes or bought a guaranteed lifetime annuity income. Currently, it is predicted that this number will drop to one in five.
The new pensions freedoms implemented in 2015 mean, that there is no longer a requirement to buy an annuity and they now allow more flexibility in terms of how you take the money. In very simple terms it is now possible to withdraw up to 100% of your personal pension fund, subject to your highest marginal rate of income tax, personal allowances and impact on benefits you may receive.
It is now also possible under the new rules for pension savings to be passed on to children or beneficiaries potentially free of tax.
Things to Consider
Mainly, how to make my pension pot last a lifetime?
What is a sustainable level of drawdown which can be taken annually and most importantly, is it tax efficient?
These options can be answered through a careful financial planning process and understanding of your personal circumstances and future plans. Wherever you are on the retirement spectrum, either currently saving for retirement or considering your retirement options please contact us for a free, informal chat.
Mark Chiva, Independent Financial Adviser,
mark.chiva@haverfords.co.uk
01733 308 666
