Pensions often get a bad press! We think there are a few reasons for this:
Many people don’t know all the new rules
Pension scandals and scams
Poor understanding of the benefits.
In the olden days you had to exchange the accumulated fund for an annuity and if you didn’t live very long, your pension would die with you. Some people think this still applies.
The new pension freedom rules mean that investing via a pension is now a very attractive option.
See what you think when you have read all the benefits:
A pension is just like a big bucket into which you pay some money each month or year
Your employer now legally has to put money in too
The Government adds more money (another 20% in tax relief ) as an incentive for you to save
Even non tax payers can get this “free money”
Higher rate tax payers can claim more tax relief when they do their tax returns
While it is in the bucket, all the money grows tax free
Your money can be invested however you wish, taking as much or as little risk as you like
If you die, all the money in the bucket goes to your partner and/or your family
When you stop working and want to use your pension, you have many different flexible options to secure your retirement income – you can use the fund to buy a guaranteed income or keep the money invested and drawdown whatever you need when you need it.
25% of the money in the bucket can be taken out tax free, either as a lump sum at outset or over time to maximise tax efficiency.
Money in your pension bucket is usually not subject to Inheritance tax when you die.
Your pension bucket can be used at any time after 55.
We do not believe there are any downsides now to maximising your pension funds.
Many people are choosing to use other savings to spend in retirement BEFORE they use the money in the pension bucket, because it is such an efficient way of holding their money. Sadly many people make the mistake of taking money out of their very efficient pension bucket and putting it in less efficient places because they don’t understand how it all works.
So, don’t miss our and make mistakes. Ask us and understand the new rules so that you can make the most of your pension.