New Pension Drawdown Rules today.

SippTechie

I can clarify the point about not being able to contribute after using all of your fund to access drawdown.

I spoke with one of the HMRC policy team first thing this morning about this specific anomaly, and the document is just not worded very clearly.

This restriction only applies if you access flexible drawdown. If you have simply used all of your fund to access capped (old-style) drawdown, then you are still able to contribute.

Cautious_Investor_3

SippTechie wrote: »

I can clarify the point about not being able to contribute after using all of your fund to access drawdown.

I spoke with one of the HMRC policy team first thing this morning about this specific anomaly, and the document is just not worded very clearly.

This restriction only applies if you access flexible drawdown. If you have simply used all of your fund to access capped (old-style) drawdown, then you are still able to contribute.

Thanks for the clarification.

Good news and better than I had originally feared.

The Cautious Investor

Boondocks

jamesd wrote: »

The big bad news of this seems to have been missed: from age 55 we'll be limited to 100% of the GAD limit in drawdown instead of the current 120% limit

I'm already in drawdown. Does the 120% to 100% reduction mean my pension is going to be cut by 20%?.
If so when?-My review date is April2011

Careful_ly

If someone is already getting income from an unsecured pension, and this is their only income, what effect do these new rules have ?

Hope someone is able to understand these new rules as I cannot.

LOST

Boondocks - 100% of GAD at your review date, only if the review is after 5th April 2011, else you could get away with 120% post review.

Careful_ly - no changes to your drawdown pension until your 5 year review takes effect after the 5th April 2011.

Only other differences are that you can continue drawdown post 75, and death event on drawdown fund is subject to 55% tax if paid out as lump sum.

Careful_ly

Thank you for your reply Lost, so a 20% drop in income then.

I think bringing forward the 5 year review to sometime between now and April will have to happen, that will take him closer to 65 when his other pensions become due.

It seems these rules help the really rich, whilst making it more difficult for others. Don't they realise this will stop many people from taking early retirement and freeing up the jobs for others.

The government are changing the rules when people have already taken early retirement or are so close to retirement that they cannot make other plans.

Linton

I would have thought that a 120% GAD drawdown isnt safely sustainable, and you would be in serious danger of depleting your capital before your demise so becoming a burden on the taxpayers. Which is presumably the reason for the change.

Incidentally its a 16.666% reduction (20/120) not 20%.

Careful_ly

It doesn't need to be sustainable, just to get him to 65 when 3 other pensions become payable.
I know its not 20% its actually less than 16.66% when the tax is taken into consideration.
Its annoying when plans have been made to retire early and the goalposts move.
The NUMBER being required for his retirement is on the low side of alot of peoples expectations, so with lots of things rising in price there is not alot of spare capacity.
He could never claim benefits as he has cash assests in excess of the allowable level to claim anything. How many people who have saved hard into a pension scheme would really blow it all to live off benefits?
Lets not forget that the money in his pension fund is there because he put it there, its not the governments money. Perhaps ISAs would have been a better choice over pension, at least it stays in your own control.

Gatser

Careful_ly wrote: »

Its annoying when plans have been made to retire early and the goalposts move.
How many people who have saved hard into a pension scheme would really blow it all to live off benefits?
Lets not forget that the money in his pension fund is there because he put it there, its not the governments money.
Perhaps ISAs would have been a better choice over pension, at least it stays in your own control.

I Agree
I Agree
I Agree
I Agree
Yes... we save hard to try and get a comfortable retirement income with OUR MONEY... and rules are changes in the 11th hour to upset our best laid plans.
What sort of message does this send out about responsible retirement saving?

What is really galling ... we are TOLD that 1.2 x GAD will ensure we all become benefit claimants. What rubbish.
What should be a MAJOR concern (to minimise benefit claims) is to protect (say) £400k of the pension fund but
ensuring it goes into safe investments (guaranteed by HM Govt), then allowing flexibility over that amount.
Forcing us into outdated/poor value Annuities is not the way forward.

Otherwise, we could all stay in drawdown, put all pension money into the Icelandic Tigers Fund...
then sit and wait... for when we are able to claim those beloved benefits!

Errr....no....give me TRUE flexibility with MY pension money please, Mr Cameron. You can keep your benefits, I could GUARANTEE that!

johnaka

all this talk of big pension's.
I don't know any body who has that kind of a pension pot.
if I had £300,000 I wouldn't put that to any kind of pension pot.
I like it where I can get my hands on it and if poped it I'd like my family to get their hands on it to.
any way how would all this affect a small pension??
all in all I only have a small pension pot of around £50,000 of which £36,000 is made up of contracting out serps.
so where does this leave me then?
I'm hoping to get around £155 aweek pension ,this inc state pension.