BrightPay Blog


Oct 2014

18

Greater pension flexibility announced for UK

Pensioners will be offered new freedoms to dip into their retirement cash.

In the latest phase of the biggest shake-up of private pensions in a century, the over-55s will be able to withdraw several lump sums from their pension pots instead of just one.

George Osborne’s move raises the prospect of pensioners using their funds almost like bank accounts to invest in property or shares, pay off debts or help children and grandchildren.

The 55 per cent tax charge on pensions left to children and grandchildren is being abolished altogether.
Up until now, retirees were able to take 25 per cent of their pension tax free – a sum fixed on the day they first dipped into their pots.

If you had a £100,000 pot at the age of 55, the maximum you could take tax-free was £25,000. The rest typically went into an annuity.

However, in the Pensions Bill, the Chancellor will announce you can dip into your fund multiple times and have 25 per cent of each slice tax free. The balance would remain invested and grow, again tax free – giving savers an incentive to keep their money invested in the stock market.

Mr Osborne said: ‘People who have worked hard and saved all their lives should be free to choose what they do with their money, and that freedom is central to our long-term economic plan.

‘From next year they’ll be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families tax-free".

Posted byAnn TigheinHMRC