UK Pensions Are Changing

Posted on by Aspen Woolf UK

Pensions Are Changing

As of the 6th of April, 2015 you’ll have more freedom than ever before over how you take money from your pension pot. This is the opportune time to sit down and very seriously think about what you would do with your pension.

Pension changes affect you if:

  • you’re 55 or over, and
  • have a pension based on how much has been paid into your pot (a defined contribution pension)

Once you retire you can decide how to take the money from your pension pot. It doesn’t matter if your pot comes from a private pension you set up yourself, a workplace pension you paid into, or both.

You can usually take 25% of your defined contribution pension pot tax free.

The remaining 75% you can take as:

  • an annuity – you buy an insurance policy that gives you an income for the rest of your life
  • flexible income – your pot stays invested while you take money from it
  • cash – you take your whole pot in one go, or in smaller sums

You can also mix some of these options. You don’t have to put all the money from your pot into these options. You can leave part of it untouched. Your pension provider might offer other options in the future.

Many people are now wondering what to do with their pensions. Property Investments, cash withdrawals, and luxury holidays are some things we have heard of a lot. It is best to shop around, do some research, and make a commitment you are most comfortable with. It’s your pension and you worked hard for it, so it’s only fitting that you give it the same time and consideration.

If you want to find out more about your pension, or even just information about the new changes, then we highly suggest going to Pensionwise. It is a free and impartial government service that helps you understand your new pension options. It’s a great place to start if you haven’t yet thought about what to do in this very new situation. Pensionwise even have a section about “How to avoid a Pension Scam”, which we highly suggest reading before you jump into anything.

If you have questions regarding your pension we are also happy to help, just send us an email. Whichever option you decide on, we hope this new and exciting change facilitates your retirement dreams. After all, your retirement could last for decades, so you will want to do all you can to ensure you will be able to afford the lifestyle you are aiming for.