Pensions advice - what to do?

dunstonh

Does anyone have references on this that I could look up?

At this time it is mostly media speculation. However, you can look up the draft proposals for the NPSS.

There has been speculation a number of times in the past but it is still here. Some think it will remain unchanged, others think it will cease to be tax free and some think it will be removed outright to force an increased income.

Moves like having no reference to it in the early drafts of the NPSS (which will probably replace stakeholder pensions) and renaming it from tax free cash to pension commencement lump sum have just fuelled the speculation.

Remember that to many people the the move to 25% across the board meant they got less lump sum benefit, not more.

EdInvestor

Note that the NPSS is not expected to be introduced until 2012.It is indeed true that the opportunity to take at least 25% tax free cash (pension commencement lump sum) has been recently extended to protected rights pensions, AVCS, FSAVCs, indeed all types of pension products.

So it might seem odd that they would then turn around and cancel it entirely: however where they spot "abuse" the govt has been known to make abrupt U turns.

So it might be sensible to take a "use it or lose it" approach and claim it if you can, particularly if you are a basic rate taxpayer: because if the 25% TFC was taken away, that would mean you would have received no tax relief at all on your pension contributions: very nasty.

One other possible interpretation of the name change to PCLS is that the Govt plans to still allow the 25% lump sum to be taken in cash in future, but might tax it. But it seems to rule out any idea of stopping the extraction of a cash lump sum entirely, another unpleasant thought.

There's no doubt about it, pensions are subject to severe regulation risk.

georgiasmum

Now I am confused! I've got ages till I retire! I just want to make sure that I will have my teacher's pension + a bit more so I can travel and be comfortable. I'd like to be able to help ot my daughter if needed as well without really hurting myself too much financially!

jamesd

georgiasmum, teachers pension for your main steady pension income, ISA for the flexible money. And possibly any lump sum the pension pays.

david78

gillsfan wrote:

I'm researching the new pension tax rules that came into force this year

Welcome to the site gillsfan. Could you start a new thread on this so we can discuss it properly.