Clarifying The April 2015 Changes In the Pension Rules
Last April 2015, the UK allowed retirees aged 55 and above to freely access their pensions as long as they pay income tax. People who don’t like the pension systems much or would like to do something else with their money are likely to want to access their pensions and pay the income tax. Sadly, the income tax rate is quite high as it is more than 30%. A delicate balance is required for most withdrawers in this regard.
Why annuities (the usual amounts received by retirees before pension freedoms were announced) sucked is because pension service providers prioritised the idea that the elderly could live as old as 100 years old. If you spread out those probably extra 10-15 years, then you’re losing lots of your money with meagre annuities.
However, they’re not so bad if you have a hard time sticking to a budget or you want to avoid the trouble of losing your guaranteed risk/ total amounts received until your death. The bad thing is that if you die earlier than expected, you’re getting less than what you need.
If you transfer over £30,000 during your final salary pension in 2015, you need to receive advice from an independent advisor. Now, why would the government want that? To make sure that you’re making an informed choice (or at least they can clear it in their conscience that they tried to help you).
There’s also a new death tax rate placed at 55%.When you die it would be sad to know that your family only receives 45% of the amount of your pension amount.