Changes to pensions

hayleydaley

I im sitting here wondering . What is exactly the change to the pensions April 2015 As I thought you could already take out 25% of your pensions.

jem16

hayleydaley wrote: »

I im sitting here wondering . What is exactly the change to the pensions April 2015 As I thought you could already take out 25% of your pensions.

You can.

The difference is that from April 2015 you can take out the whole pot, subject to tax on the remaining 75%. Previously you could not do that.

atush

But if you want to s=or should take the pension then at all, or any of the 75%, will depend on your situation at the time.

It is daft to take pensions, when you dont need them, and pay tax on them you would not have to pay if you waited.

worn_out

Govt trying to boost spending in the economy, seeing as it's flatlining because a lot of people are skint.. once the pension pot has gone, what then ?

Sapphire

worn_out wrote: »

Govt trying to boost spending in the economy, seeing as it's flatlining because a lot of people are skint.. once the pension pot has gone, what then ?

I'm very suspicious of what the government is planning to do. There will be very many people who will squander the money and be left with nothing, rather than having a regular sum every month. What will be the point of saving for a pension if you are going to spend the money as soon as you retire?

Perhaps it's also a ruse to get people to fund their care from their pension money if it is the only asset they have?

It's also a concern that people who do not want to take out money from their pension may be forced to do so by unscrupulous companies.

torbrex

The rule changes make it easier to move your pension pot into a drawdown which in my opinion is better for those of us with smaller pots. If I were forced to purchase an annuity, it would be a pittance of an income and I would be forced to work for longer, possibly even past my normal retirement age.
The new rules will allow me to draw an income from my pot that will actually allow me to retire early.

kidmugsy

Sapphire wrote: »

Perhaps it's also a ruse to get people to fund their care from their pension money if it is the only asset they have?

Good.

Sapphire wrote: »

It's also a concern that people who do not want to take out money from their pension may be forced to do so by unscrupulous companies.

"forced"? How?

Sapphire

Good.

Why? Many people have worked for 50 years or more and their pensions have been very hard won – and are certainly not 'gold plated' in many cases, despite what hostile whiners in the national press, etc, would have you believe. One good thing, I suppose, in such a scenario, would be that their heirs would not inherit and would be forced to work hard to achieve a decent retirement.:D

"forced"? How?

By relaxations in the law, if it is not properly enacted.

kidmugsy

Sapphire wrote: »

Good.

Why? Many people have worked for 50 years or more and their pensions have been very hard won – and are certainly not 'gold plated' in many cases, despite what hostile whiners in the national press, etc, would have you believe. One good thing, I suppose, in such a scenario, would be that their heirs would not inherit and would be forced to work hard to achieve a decent retirement.:D

Because that is what saving is for, to see you to the grave in comfort. What's your alternative, to sponge off the taxpayer?

Sapphire wrote: »

"forced"? How?

By relaxations in the law, if it is not properly enacted.

Oh rubbish.

dunroving

My understanding is that under the current/previous rules, drawing down a pension was complicated. I have a friend who has a decent pension pot who does not want to purchase an annuity. She would like to first take her 25% tax-free lump and invest in ISAs, etc., and then gradually draw down the remainder, hoping she doesn't run out money before she runs out of life(!)

It still seems pretty unclear how straightforward it will be to withdraw periodic amounts from a pension fund, but I have read several promises that the government will provide guidance on how this will be done. April is pretty close but I still haven't seen anything. Anyone have any clues how easy it will be to draw income from a pension pot following the rule changes? For example, if my friend's boiler blows up will she simply be able to contact Aviva and ask for £3,000 from her pension pot to buy a new one? She is 63 and on state pension.

dunstonh

My understanding is that under the current/previous rules, drawing down a pension was complicated.

No different to the changed method except there were caps before.

She would like to first take her 25% tax-free lump and invest in ISAs, etc.

Currently, the pension is invested tax free and outside of the estate. Why take it out of the pension if it is not needed?

and then gradually draw down the remainder, hoping she doesn't run out money before she runs out of life(!)

So, maybe doing the phased drawdown method would be better (assuming she can afford the risks)

It still seems pretty unclear how straightforward it will be to withdraw periodic amounts from a pension fund, but I have read several promises that the government will provide guidance on how this will be done.

There will be no guidance on how this is done. That is for the product providers to decide. However, it will likely be similar to how phased drawdown is done currently except with an auto monthly payment facility.