confused about pension reforms

flexingh

Hi all

first post to the forum however I have been a visiting this forum and picking up info and advice given to others in similar position as me.

my question is, and I hope some of you experts here will be able to answer this or send me in the right direction.

I will be attending a appointment with my father to see a IFA and also on the same day a wealth planner with a high street bank to discuss my fathers pension(s), he is 54 (55 in November). I have heard all over the news/press about the pension reforms and I have got to grips with some off changes but how do the reforms impact higher rate tax payers and are there any negatives with the reforms some of what I have heard sounds really good. too good to be true in some cases.

all your help is appreciated and hopefully i have some replies back.

thanks all:beer:

philwal_2

If your father is high rate tax payer already he would pay high rate tax on his pension income with the exception of the 25% tax free lump sum.

xylophone

Make sure you are seeing an Independent Financial Adviser.

wealth planner with a high street bank

Will be likely to recommend the bank's own products- evaluate carefully.


https://www.unbiased.co.uk/ifa-qualifications



http://www.retirementplanner-sw.com/digital_assets/15890/Freedom_and_choice_-_new_ways_to_take_pension_tax_free_cash_and_income.pdf

http://www.thisismoney.co.uk/money/pensions/article-2640677/What-tax-I-pay-retirement-income-pensions-revolution.html

flexingh

thanks for the replies,

"Make sure you are seeing an Independent Financial Adviser", yes Xylophone the first adviser is a fully independent FA and the other is someone who was introduced to us by our banking adviser on a recent visit to the branch.

let me clarify , he is currently a higher rate tax payer as he is still working full time he wants to find out about his available options once he turns 55 and if from a tax point of view it would have any clear advantages or disadvantages from the new pension reforms.

apologies I am new to this pension stuff so hopefully you guys can help

xylophone

If he still working full time he will not necessarily wish to access his pension?

https://www.moneyadviceservice.org.uk/en/articles/tax-relief-on-pension-contributions

https://www.moneyadviceservice.org.uk/en/articles/the-lifetime-allowance-for-pension-savings

The IFA will explain all the above.

atush

If he is still owrking it is best he increases payments into his pension (certainly all income above BRT) and NOT take the pension from age 55. He doesn't need to take the money now.

AS it will be taxed is he takes an income, and that is a waste. He should take it when he wishes to retire.

Drop the high street bank guy and add a second IFA.

philwal_2

As atush says I would not even bother with the bank he will only be able to advise on their own products.

jem16

flexingh wrote: »

to discuss my fathers pension(s), he is 54 (55 in November).

What kind of pensions does your father have - ie Defined Benefit or Defined Contribution or a mixture of both?

flexingh

Thanks for the replies all.

My father has defined contribution pensions total value across the 3 he has is around 410k. Am i right in thinking the tax relief he gets is 40% and when he chooses to retire or take his pension if his income is less which it should be he would only pay 20% tax unless his income then is still high.

I will cancel the bank appointment and book another appointment with another IFA

Thanks everyone

flexingh

Forgot to ask are there any drawbacks due to the new changes?

Thrugelmir

flexingh wrote: »

Forgot to ask are there any drawbacks due to the new changes?

Making a hasty decision when none is necessary. With one of lifes most important decisions getting it right on an individual basis is what matters. Sure to be new products available in the months to come.