Living in Retirement

What you need to know if you are at retirement or thinking about retirement

With effect from 6 April 2015 wide ranging changes to pension legislation were introduced which revolutionised how individuals can access their pensions savings.

If you are nearing retirement, it is important you take these changes into account.

Broadly, these changes can be summarised as follows:

  • Individuals are able to access the whole of the pension savings from age 55 (age 57 from 2028), either in one lump sum or over a period of time.
  • 25% can be taken tax free with the remaining amount subject to tax at the individual’s marginal rate.
  • The full value of the fund can be passed to nominated beneficiaries on death in most cases free of all taxes prior to age 75 and subject to tax at the recipient’s marginal rate after 75.

Greater freedom, more choice

SMH Financial Services feel that the freedom afforded by the changes is very positive as it will encourage more people to actively think about their money in retirement and consider the choices that are available to them.

Guaranteed income solutions such as annuities, particularly enhanced annuities continue to be a good solution for those who want the certainty of a secure level of income for life that they won’t outlive. Because of this, they will continue to be the cornerstone of many people’s retirement income.

Getting the best value from your pension

What is important is to get the best value from your pension.

As you can see, these pension changes will offer you far more freedom over the decisions you make about your retirement.

If you require more information or advice as to how these changes may affect you, please speak to us.

Small Pension pots

Additional flexibility has been introduced for people with smaller pension pots allowing them to be taken as a lump sum.

Under these rules, if your pension pots across all your arrangements total £30,000 or less, you can take the whole of it as a lump sum from age 55. Pots of up to £10,000 each can also be taken as a lump sum (up to three such pots).