The Chancellor George Osborne has announced dramatic changes to the way Pensions can be taken in his budget, so what does it all mean?
Well the changes proposed are currently subject to consultation and we expect the final rules to be announced in the autumn budget by George Osborne.
The changes proposed in this budget were all about providing much greater flexibility, so from next April you will be able to take all of your pension as a cash lump sum with the first 25% tax free and the remainder being taxed if you are aged 55 or older.
After taking your tax free cash, when drawing income from the balance of your pension funds you will be able to decide how to do this, whether this is drawing income directly from your funds or choosing to buy a secure income via a type of an annuity.
In our experience, deciding the amount of income needed in retirement and how this is to be achieved can be quite complex, there are number considerations which affect when and how you access your pension savings, such as:
- Your age
- Your state of health
- The amount of income you feel you need
- Your personal tax position
- The amount of risk you may be prepared to take
We believe that for the vast majority of our clients, a combination of retirement planning options will be required to achieve capital and income needs sucessfully in retirement.
Most of our clients will need income in retirement, and in our view retaining pension assets in pension plans is still a very tax efficient way to plan your income needs, thus mitigating the tax you might have to pay.
Planning your retirement has never been more important than it is now; speaking to one of our consultants now about when and how you take your pension benefits should provide comfort and peace of mind so that you can enjoy your retirement.