New legislation allows increased payment flexibility If someone is a member of a defined contribution scheme from 6 April 2015, they will be able to access their pension fund, in full, without needing to purchase an annuity. With a defined contribution pension, you build up a pot of money that you use to provide an… Continue reading Pension fund access in full
Category: News
Open Market Option
Shopping around to obtain a higher rate Prior to the commencement of the pensions reform changes, historically purchasing an annuity has been the most common way of turning someone’s pension savings that they’ve built up over the years into an income that will last them the rest of their life. After deciding what level of… Continue reading Open Market Option
Defined Benefit Pension Schemes
Salary-related pension based on the number of scheme membership years Some employers offer these schemes, also known as ’salary-related pension schemes’. When someone retires from the scheme, it pays them a pension where the benefit is based on rules set out by the scheme. How defined benefit schemes work Defined benefit schemes usually provide a pension income… Continue reading Defined Benefit Pension Schemes
Defined Contribution Pension Schemes
Building up a pot of money that can be used to provide an income in retirement With a defined contribution pension, the member builds up a pot of money that they can use to provide an income in retirement. Unlike defined benefit schemes, which promise a specific income, the income the member might get from… Continue reading Defined Contribution Pension Schemes
Defined Benefit transfers
Safeguards to protect pension benefits Transfers from defined benefit schemes to defined contribution schemes will continue to be allowed (but will exclude pensions that are already in payment). However, transfers from defined benefit schemes to defined contribution schemes will be restricted for members of unfunded public sector schemes, although you may be allowed to transfer… Continue reading Defined Benefit transfers
Payment options
Defined benefit pension schemes beyond 6 April 2015 The transitional rules on triviality and small pots will continue to apply to defined benefit pension schemes beyond 6 April 2015. The minimum age for accessing pension savings in this way will reduce from 60 to 55. This only applies if a member is taking their pension… Continue reading Payment options
Retirement products
Tax rules amended to allow greater innovation The tax rules will also be amended to allow innovation in retirement products. This is happening in a number of ways: Lifetime annuities will be able to decrease in payment, for example, when someone’s State Pension comes into payment A lump sum will be able to be taken… Continue reading Retirement products
Cashing in pension benefits
New system to encourage further pension saving Currently someone in income drawdown cannot receive tax relief on future contributions. To encourage further pension saving under the new system: If they’re currently in flexible drawdown, they will have a new annual allowance of £10,000 If they drawdown more than 25% tax-free lump sum from a defined… Continue reading Cashing in pension benefits
Tax-free lump sum on death
Freedom to pass on an unused defined contribution pension People with defined contribution pension savings will no longer have to worry about their pension savings being taxed at 55% on death. Commencing from 6 April 2015, individuals will have the freedom to pass on their unused defined contribution pension to any nominated beneficiary when… Continue reading Tax-free lump sum on death
Income withdrawal
Interim rules from 27 March 2014 Unlike a conventional personal pension, which is used to build up a pension fund until a chosen retirement age is reached, income drawdown is used to pay an income once someone decides to retire or semi-retire. The remainder of their fund remains invested, rather than using it to buy an annuity. There… Continue reading Income withdrawal
