New Pension Freedoms - Sources of Information

bmm78

Pretending that the phrase "pension bank accounts" was never mentioned is a big step to understanding the upcoming changes. So much confusion has been caused by the chancellor's reference, which is not in any way an accurate reflection of what is included in the Taxation of Pensions Bill.

It's probably more important to know which sources of information to ignore. So far I've got:

Any politician
Dr Ros Altmann
The Daily Mail
The Daily Telegraph

jamesd

bmm78 wrote: »

Her views are also highly contentious, and in my opinion extremely dangerous with regards to how much investment risk people with relatively small pots in retirement can reasonably take.

The thing about small pots is that they are likely to only be a small part of the total income picture, so the overall risk is likely to be low.

It's somewhat ironic but I'd say that the risk tends to be higher at higher income levels where the investments are a larger portion of total income.

A drop from say £11,000 to just state pensions of £10,000 (£190 a week for a fullish working life on modest income) could well be considerably less hard to deal with than a drop from £40,000 to £30,000 even though in absolute terms the latter case probably has more capability to adjust lifestyle.

bmm78 wrote: »

In my experience the best sources of accurate technical infomation are the websites of the major providers.

I agree. I've quite often been impressed with and linked to such technical information, even where I might not want to mention the products that are being sold somewhere else on the site.

soperman

Hello

I have constructed an at-a-glance table comparing the tax treatment of death benefits of an annuity, drawdown plan and ISA but I cannot seem to add the image on here. The following link takes you to my blog where the table can be viewed:
https://www.retireeasy.co.uk/news/article/pension-annuity-and-drawdown-plans

I hope this helps.

Linton

soperman wrote: »

Hello

I have constructed an at-a-glance table comparing the tax treatment of death benefits of an annuity, drawdown plan and ISA but I cannot seem to add the image on here. The following link takes you to my blog where the table can be viewed:
https://www.retireeasy.co.uk/news/article/pension-annuity-and-drawdown-plans

I hope this helps.

Its a very helpful idea but I fear the data you have put up may be misleading....

1) Including death before taking a pension income as an aspect of "pension annuity" is confusing - the new rules are actually the same as drawdown. If the deceased had bought a pension annuity the death benefit would just be as specified by the terms of the annuity and would be treated as income.

2) Suggest you dont use the term "marginal rate" as many people have been confused by it thinking it means tax band in force prior to the death benefit. "taxed as income" would be clearer.

kidmugsy

Linton wrote: »

2) Suggest you dont use the term "marginal rate" as many people have been confused by it thinking it means tax band in force prior to the death benefit. "taxed as income" would be clearer.

Strongly agreed.

SnowMan

soperman wrote: »

I have constructed an at-a-glance table comparing the tax treatment of death benefits of an annuity, drawdown plan and ISA

While I applaud any attempt to identify the different death benefit scenarios, I think the Candid Money summary table is more helpful and accurate

http://www.candidmoney.com/articles/287/flexible-pensions-from-april-2015

Value protected annuities (which I'm guessing are quite rare) should be kept completely separate from conventional annuities with a guarantee period and/or dependant's pension as as they are different animals. And it is important to include pre crystallisation (as defined by Justin in his article) death benefits also.

And yes 'taxed as income' as per Justin's table is accurate, the point being for those that don't realise, that the death benefit itself can push someone into a higher tax band for part of the lump sum.

rgannon4

SnowMan wrote: »

I'm setting up this thread for posters to give links to information on the new pension freedoms announced in the budget and subsequent developments.

The best information I have found so far is

Candid Money - Flexible Pensions from April 2015

Gov.uk - Draft Legislation - The Taxation of Pensions Bill

The Pensions Advisory Service (TPAS) website - Retirement Choices

Has anybody else got any good sources of information?

This one is helpful and up-to-date:

http://www.yourretirementadviser.co.uk/blog/

soperman

SnowMan wrote: »

While I applaud any attempt to identify the different death benefit scenarios, I think the Candid Money summary table is more helpful and accurate

http://www.candidmoney.com/articles/287/flexible-pensions-from-april-2015

Value protected annuities (which I'm guessing are quite rare) should be kept completely separate from conventional annuities with a guarantee period and/or dependant's pension as as they are different animals. And it is important to include pre crystallisation (as defined by Justin in his article) death benefits also.
.

Thanks for your comments Snowman

The purpose of the table is to identify the differences as succinctly and accurately as possible and also to add in the different treatment of an ISA which has been largely ignored.

Annuity providers have included Value Protection in their own 'before and after' annuity comparisons so I have followed that convention.

I note that Candid have omitted dependent's pensions from the post April 2015/pre age 75 crystallised part of their table which could be interpreted as not being available post April 2015.

The important thing to convey is the free and independent resource that is is already available provided by contributors on this forum, Candid and RetireEasy.

SnowMan

There is a good summary of the new pension freedoms from April 2015 on the ATS website

http://www.alliancetrustsavings.co.uk/forms-documents/guides/pension-changes-2015.pdf

SnowMan

According to this press release the government are setting up a pensions youtube channel

https://www.gov.uk/government/news/pensions-explained-minister-on-air-across-the-country-to-promote-importance-of-retirement-planning

There is a link to the youtube channel from that press release or the direct link is

https://www.youtube.com/user/PensionTube