MSE News: Over-55s get green light to use their pension like a bank account

MRMX9

Given the way the stock market is tanking - Dow down 430 points today - will there be much left of these people's pension savings next April to spend?:D Its looking quite bleak at present with lots of bad economic news - and that's before we worry about things like ebola.

Perhaps they might wish to wait until their investments recover?

dunstonh

Given the way the stock market is tanking - Dow down 430 points today - will there be much left of these people's pension savings next April to spend?

Hardly tanking unless you are a Daily Mail reader. We are just about entering correction territory now. Got some way for it to go before it gets classed as a crash. The Dow is not even at a 12 month low. Similar drops occurred in August and February this year. Of course, it could continue dropping.

and that's before we worry about things like ebola.

Apparently, Ebola is a big topic in the US and some have attributed some of the drop to this.

Its looking quite bleak at present with lots of bad economic news - and that's before we worry about things like ebola.

Good time to be paying in though.

Perhaps they might wish to wait until their investments recover?

People planning to disinvest next year shouldnt be in the markets now. If they are then it just highlights the risks of letting people with low knowledge loose with all these extra freedoms.

Pincher

Just give me MY money back.

The tax relief they put in was MY salary before it was called tax.
The contribution from the employer was to remunerate MY labour.

45%, 55% if I want the whole thing?

This is like social services keeping me away from my children, just in case I might abuse them. They force me to put my money in a borstal, where the fund manager nuns and priests abuse them for decades, using them as forced labour for their benefit, then charge me for having them back.

The money under my own care has flourished and grown into stout healthy assets. What I will be getting back is malnourished, emaciated husks that can barely stand.

mgdavid

Pincher wrote: »

Just give me MY money back.

The tax relief they put in was MY salary before it was called tax.
The contribution from the employer was to remunerate MY labour.
......

which if paid as salary would be subject to PAYE and NIC and probably would not include the employer's contribution in full.

zagfles

dunstonh wrote: »

People planning to disinvest next year shouldnt be in the markets now. If they are then it just highlights the risks of letting people with low knowledge loose with all these extra freedoms.

People have had freedom in the accumulation phase for years. The new freedoms apply to the decumulation phase. It would be quite sensible to still be in "the markets" for someone aged 54 intending to go into drawdown next year from a fund that would need to last 30-40 years. It would not be sensible if they intended to buy an annuity next year.

zagfles

Pincher wrote: »

Just give me MY money back.

The tax relief they put in was MY salary before it was called tax.
The contribution from the employer was to remunerate MY labour.

45%, 55% if I want the whole thing?

This is like social services keeping me away from my children, just in case I might abuse them. They force me to put my money in a borstal, where the fund manager nuns and priests abuse them for decades, using them as forced labour for their benefit, then charge me for having them back.

The money under my own care has flourished and grown into stout healthy assets. What I will be getting back is malnourished, emaciated husks that can barely stand.

Well, yes, that was the previous attitude of the govt and the financial services industry. Just because some people "abuse" their investments, no-one can be trusted and everyone must be nannied. That's changing now...

condoghost

[FONT=&quot]In my mind, a 25% single tax free lump payment with a drawdown policy on the rest with tax only paid as and when money is taken out is being replaced with any number of lump sum payments taken out where 75% of each is taxed up front.
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[FONT=&quot]This so called "flexibility" is coming at a price. A "good deal" for some won't be for others given that tax will be paid up-front on amounts that previously were included in the single one-off tax free lump sum payment.

Looking at a pension pot of £100,000 for example (:jeasy maths for me).

Pre-April-2015.
One lump sum tax free payment £25,000 and £75,000 in a drawdown account used to buy an annuity or where tax is paid at marginal rate only as and when money is taken out.

Post-April-2015.
Lump sum payment £10,000 = £2,500 tax free £7,500 taxed at marginal rate for that year. A second lump sum payment £10,000 = £2,500 tax free £7,500 taxed at marginal rate for that year. A third lump sum payment £5,000 = £1,250 tax free £4,750 taxed at marginal rate for that year. And so on, and so forth. To get your hands on that £25,000 tax free lump sum up-front you’ll be forced to take a lump sum payment of £100,000 paying tax at marginal rate up-front on that £75,000 which otherwise would have been sat there tax free until such time as money was taken out :eek:!
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[FONT=&quot]Nice one
[/FONT]

SeekTruth

Suggest read HMRC Draft guidance on Taxation of Pensions

noh

condoghost wrote: »

In my mind, a 25% single tax free lump payment with a drawdown policy on the rest with tax only paid as and when money is taken out is being replaced with any number of lump sum payments taken out where 75% of each is taxed up front....................

Both options will be available post April 2015. The current method is not being replaced it is being added to with further options.

zagfles

noh wrote: »

Both options will be available post April 2015. The current method is not being replaced it is being added to with further options.

Have the press misreported this? A lot of people seem to be making the same mistake, that the "UCFPLS" replaces the normal drawdown rules rather that simply being another option.