Current Rules regarding Tax-Free Lump Sums
You may be aware that in recent years pensions have been targeted by the government for various reforms. Significantly, Stakeholder pensions were introduced in 2001 and latterly in 2006 a series of changes were introduced collectively known as ‘A-day’. One of these changes involved the simplification of the taking of pension benefits such as tax-free cash. Currently most people with a private pension scheme who are over 50 are able to take 25% of the value of the pension fund as a tax-free lump sum and defer the taking of their retirement income if they choose. The remaining fund simply remains invested until you actually retire. This means that financial goals such as paying off the mortgage early or paying off the car loan become available to you now without affecting your retirement income.
Aged between 50 – 55 before April 2010?
However, things are changing again! Prior to April 2010 the retirement age is set at 50 whilst beyond this date the retirement age moves back to 55. This effectively means that if you are aged between 50 and 55 before April 2010 your pension assets are available to you but after April 2010 they become locked until you reach age 55.
This means that there could be benefits available to you now that become unavailable to you after April 2010 and you may have to wait until you are 55 to access any of your pension scheme tax free cash or income.
How Lawson-West Financial Services can help
At Lawson-West, we are committed to ensuring that our clients have access to the full range of advisory services, and this includes access to financial advice on this topic. Our Independent Financial Adviser Damian Mitchell is on hand to help if you would like to know more about your privately funded pension and how to access some or all of its benefits. Damian is available to offer you a free 30 minute consultation to discuss this important issue with no fee and no obligation.
If you would like to know more please phone 01858 445480 now.
