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Your Pension Pot and new pension options

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  • Your Pension Pot and new pension options

    Huge swathes of the British population have no knowledge of the upcoming pension reforms, despite the new freedoms coming into play less than a month from today.

    Several concurrent pieces of research have found that large chunks of respondents voice ignorance of the reforms.
    The main opportunity is a result of new rules governing how those aged 55 or over can access their pensions. From 6 April, no longer will so many people be railroaded into buying an annuity with the pension they have built over their working lives - an annuity often representing poor value and sometimes being a woefully inappropriate option.

    There will be three choices: buy an annuity (a regular income for life) : take regular pots from your pension pot as and when you like) : take the whole lot in one go.

    You will have to decide what is best for you personally and be aware of the tax implications etc.
    Many will be out there to try and help you, but also be aware they maybe there to help themselves first.
    Below is the official GOV.UK site that has lots of info and links to help with the new options.

    A free and impartial government service that helps you understand your new pension options.
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  • #2
    Re: Your Pension Pot and new pension options

    If you have debts then there are a lot of things to think about before you decide it's a good idea to take money out of your pension to pay your debts. I look at this problem in more detail here: http://debtcamel.co.uk/2015-pension-...ing-off-debts/

    As enaid says, tax implications are important.

    Also important, and not much mentioned on Pension Wise at the moment, is the effect on your current or future benefits - the money you take out is likely to be treated as 'capital' and this may mean you can't claim means-tested benefits even if you spend this money on clearing debt.


    • #3
      Re: Your Pension Pot and new pension options

      Ive not looked at this in depth yet, but would value your opinions on my situation
      6 years ao I took 25% of my pension pot as a lump sum (around £5,000) and I receive an annual pension of around £900.
      As I am a widow with no dependants my pension will die with me, so it seems that in order to guarantee that I receive the full amount that remains outstanding in my pension pot it would make sense to me to cash the remaining in as a lump sum.
      I currently get the savings credit element of pension credit and Im on an AIP for the next 5 years


      • #4
        Re: Your Pension Pot and new pension options

        hi CYNthesys,

        your pension is almost certainly coming from an annuity that was boght when you took the lump sum.

        If this is the case, you can't do anything at the moment,. The April 2015 changes dont apply to anyone with an annuity. The government has said it will change this in April 2016 but the details of how this will work are not known.

        In general (and making no comment on your health or need for immediate cash) you will do better with an annuity if you live a long while, and better taking the cash if you live a shorter time. This however is complicated by your benefits situation.

        I suggest forgetting all about it for at least 9 months until it is clearer how the sale of annuities is likely to work


        • #5
          Re: Your Pension Pot and new pension options

          As new pension freedoms arrive be ScamSmart

          As the radical changes to the pension system that will allow people to access their pension pot come into force next month, the Financial Conduct Authority is urging people to be ScamSmart and on the look-out for dodgy investment scams.

          The FCA is launching the next wave of their ScamSmart campaign that highlights the warning signs consumers need to be aware of from scammers who want to trick people into investing their hard earned cash.
          The new pension flexibilities mean thousands of people will be making vital decisions about their retirement, and this can be the very moment that unscrupulous fraudsters will offer investments with high returns. The FCA wants would-be investors to:
          • Reject cold calls – investment scammers will often cold call
          • Check the FCA Warning List
          • Get impartial advice

          Martin Wheatley, Chief Executive of the FCA said:
          "The new pension flexibilities will offer people the freedom to make choices that suit their plans for retirement. But this is exactly the time when people need to alert to the dangers of scammers offering opportunities that are too good to be true.
          "Our ScamSmart campaign sets out the straightforward steps people can take to protect themselves and number one is if you get cold called about an investment opportunity, hang up.
          "Any decision about your retirement is important, start off on the strongest footing by being ScamSmart."
          Notes to editors

          1. The FCA ScamSmart website sets out what people can do to spot investment fraud.
          2. The Government’s new pension flexibilities come into force from 6th April 2015, find out more information.
          3. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
          4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
          5. Find out more information about the FCA.



          • #6
            Re: Your Pension Pot and new pension options

            How anyone can inherit a pension: New rules allow your nest egg to be passed down the generations tax-free

            From April 6, millions of savers will be able for the first time to pass their pension pot free of tax to anybody they want when they die.
            The main winners from these death tax reforms are those who inherit a defined contribution pension fund left to them by someone under the age of 75 who was already withdrawing money from the pot before they died.
            Previously they would have been stung with a hefty tax bill of more than half the value of the fund.
            Tom McPhail, head of pensions at broker Hargreaves Lansdown, says: ‘A £100,000 pot inherited today would attract a tax charge of £55,000. But from April 6, if the owner of the plan dies under age 75, the beneficiary can receive the full £100,000.’
            The new rules also mean those who inherit this money can pass the fund on to chosen beneficiaries, safe from tax, allowing pensions to be preserved and passed down the generations.
            Before pensions freedom day on April 6, retirement pots can be passed on tax-free only if pension savers are under the age of 75 when they die and have not touched the pension.
            But from April 6, all under 75s will be able pass on the pension tax-free, even if they had made withdrawals from the pot.
            The same applies to payments made to a spouse from a joint life annuity – a fixed lifetime income purchased with pension funds.

            These annuity rules do not apply if the deceased was 75 or more. The annuity the widow or widower receives in this case will be taxable at their marginal rate – as now. For those who die over the age of 75, what remains in a pot can still be passed on to anyone. But in future, if the beneficiaries take it as a lump sum they must pay 45 per cent tax in the 2015-2016 tax year, although this may change.
            This is still less than the previous 55 per cent.
            If beneficiaries make withdrawals from the pot instead, they will pay tax at their highest marginal rate of tax – 20, 40 or 45 per cent.
            Jamie Jenkins, head of pensions strategy at Standard Life, says: ‘The changes will make a real difference to how pensions can be preserved and cascaded down the generations.’

            David Woodhouse, head of advice services at investment adviser Chase de Vere, based in Bath, Somerset, says: ‘For many people it could now become more tax efficient to draw income from other investments that would be liable to inheritance tax on death – such as savings accounts and Isas – before tapping into pensions.’
            Indeed, he thinks that pensions are a more compelling proposition than ever.
            ‘Think about it. First, pension investments continue to grow in a tax-efficient environment,’ he says.
            ‘Second, if the need arises, those aged 55 and over can access their money whenever they want and in whatever form they want.
            ‘Add these pluses together and the case for retaining – and where possible adding to – pension assets becomes a strong one.’

            McPhail says the kinder tax treatment of inherited pensions sends out a strong message to investors.
            He says: ‘The social contract has changed. Your focus as an individual is now on your family and immediate co-dependants to share your collective wealth, rather than with the wider community through the tax system


            • #7
              Re: Your Pension Pot and new pension options

              Savers locked out of pension freedoms already: There are 12 days until the great pensions revolution begins - but is your scheme ready?

              In less than two weeks, the much-heralded pensions revolution will begin. Unveiled by Chancellor George Osborne in last year’s Budget, it will see millions of people given free access to their pension savings.
              From April 6, the over-55s will be able to take their entire retirement nest egg as cash, or access it freely — like a bank account.
              However, a Money Mail investigation has revealed that savers are already running into huge delays in getting their hands on their money, or will lose large chunks of it in hidden fees.
              Brokers are being flooded with cases where savers face a wait of up to three months to get their money, because of administrative delays or because pension providers are unprepared for the introduction of the new rules.
              We have heard from readers who are desperate to take advantage of the reforms but who have run into a wall of confusion and complication.
              Entrepreneur Ben David told us this week that he faced a bill of more than £1,600 just to draw down money from his £54,000 pension fund with insurer Aegon.
              The 59-year-old father-of-four, who lives in Southampton, runs a buy-to-let business with his wife Sheila. He wants to use the cash locked up in his pension as a deposit on another property to let out.
              Keen to take 25 per cent tax-free and happy to pay his usual rate of tax on the rest, the new rules should give him a tax-free lump sum of £13,500 and £24,300 after higher-rate tax on the remainder.
              Under the new rules, he should be able to do this easily, so he rang Aegon last month to put the wheels in motion so he could withdraw his money on April 6.
              However, Aegon told him that he had an old-style pension policy unsuited to the Chancellor’s reforms — and so he could not take out the cash as planned.
              It would accept his instruction to take out the whole amount as soon as possible only if he took financial advice — at a cost of £1,600.
              If he didn’t want to pay this, staff told him he might be able to take his pension in cash at a later date, once it had got to grips with the new rules — but this would be unlikely before the end of the year.
              Mr David says: ‘I contacted Aegon well ahead of the new rules, because I thought that if I left it until April then everyone would be doing the same thing and it would be slower.
              ‘I feel they are trying to make it difficult for savers to get their money, and are just putting obstacles in the way.’
              Money Mail also heard from Charles Rawlin, who suffered a similar experience with Aegon.

              The 63-year-old accountant, who lives in Nottinghamshire, already takes an annual income of about £10,000 from his savings pot, after moving it to a plan called flexible drawdown, which limits how much he can take each year.
              He thought the new rules would allow him to draw down extra money, so he contacted Aegon three months ago to find out how.
              His policy is eligible for the new rules, but Aegon told him that in order to take more cash he is going to have to transfer his investment into a newer type of pension.
              However, the transfer value of his pension is £12,000 less than its actual value of about £150,000.
              Transfer values tend to be lower because the company deducts a penalty for the years that you’ll no longer be in the original scheme.
              Mr Rawlin’s wife Marion is having exactly the same issue with Aegon.
              Mr Rawlin says: ‘It has been a good scheme and I’ve been pleased so far, but I am disappointed with Aegon. It has taken nearly three months to get a straight answer, and then I find I will lose £12,000 from the value of my savings.’
              Although the new freedoms are supposed to allow people to dip into their retirement savings, Money Mail revealed last week that the most expensive providers will charge customers £240 every time they withdraw money. Anyone wanting to avoid these charges will need to move to a cheaper pension with another company — but this can be a long and complicated process.


              Tied up: Official figures show that the average pension transfer takes about nine days, but in reality many savers face a far longer wait

              Official figures show that the average pension transfer takes about nine days, but in reality many savers face a far longer wait.
              The process should involve filling in a simple form and then waiting a few days for your money to be transferred, but delays in getting questions answered or getting valuations and paperwork signed off mean it can take up to three months.
              The bigger and older the pension scheme, the longer a transfer will take. Workplace pensions will take longer than personal ones, too. Danny Cox, head of financial planning at Hargreaves Lansdown, says: ‘The moment you make the application to transfer your money to another provider, your pot is locked while the scheme works out how much you have saved. That can take weeks, and for that time your money won’t be invested.’
              He says the typical transfer takes about three weeks, while a manual one (where old paperwork has to be dug out) takes about six weeks.
              Pensions Minister Steve Webb says: ‘Having given people these unprecedented freedoms, I expect providers and schemes to deal with transfer requests as promptly and efficiently as possible.
              ‘We will be keeping a close eye on the industry to ensure this happens. But these are big decisions which will affect people for the rest of their lives and it is important that everyone takes time to think through their options and takes advice as appropriate.’
              An Aegon spokesman says: ‘Many pension products were designed 20 years ago or more, and were never designed to enable the kind of flexibility that the Government has now introduced.
              ‘Mr Rawlin’s product does not enable flexi-access drawdown. In order to upgrade, he will be required to pay outstanding charges on his policy as he has received a discount on charges in the early years of his policy. Mr David is invested in a drawdown product where the flexibility he is seeking is not available. He has the option of upgrading to flexi-access drawdown.
              ‘Given the long-term financial consequences of withdrawing pension savings, we would recommend that financial advice is sought.’


              • #8
                Re: Your Pension Pot and new pension options

                A phone line to give guidance to people ahead of April’s pension reforms has opened, just two weeks before the changes take effect.
                Anyone over the age of 55 can call the government’s Pension Wise service to get help, or book a face-to face interview.
                The number is 030 0330 1001.
                The news was welcomed by the National Association of Pension Funds (NAPF). But others said it was only just in time.
                “With only 2 weeks to go until the new freedoms go live, it has been a close run thing for the Treasury to get the promised service up and running,” said Tom McPhail, a pension expert at Hargreaves Lansdown.
                And because of the Easter break, there are now only seven working days before the changes on April 6th

                Read more at: http://legalbeagles.info/pension-wis...#ixzz3VOniq1uz

                Pension Wise phone line 030 0330 1001


                • #9
                  Re: Your Pension Pot and new pension options

                  There is a lot of good advice available and to be fair the government sites are very helpful but it looks like the providers/brokers are gearing up to mess people about. There are warnings about bogus organisations trying to get their hand on your cash but what is being done to straighten out the companies who hold your pension and either tell you ‘your pension is not subject to the new rules’, charge you for ‘advice’ that is often available free or drag their heels, holding on to your pension for months? Just like high street banks and ‘approved’ lenders many of us need to watch our ‘well respected’ pension providers. I just hope there is help out there for those who get ‘stonewalled’ by their providers/brokers.

                  An optimist is someone who falls off the Empire State Building, and after 50 floors says, 'So far so good'!
                  ~ Anonymous


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                  Scammers are after your pension pot.

                  They know you can now access your savings in new ways and will try to lure you with promises of upfront cash and one-off 'deals' with guaranteed high returns.

                  Learn how to spot the signs and give yourself the best possible protection against pension predators by following this five-step guide.
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