April 6: The pension changes are here

Investing

Julie Hutchison

6th April 2015 at 8:36am

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New pension rules coming into play on 6 April will provide many of us with a range of options for retirement. We’re going to have more flexibility and choice over how we take out our cash in retirement than any previous generation, but which option will best suit your palate?

Don’t rush

You’ve spent years working hard to save, so why rush anything now – take time and weigh up your options. Our online tools and calculators can give you that time to explore your choices without having to commit. You’ll get the basics with our guides, compare ideas through the retirement pathfinder and explore your options with our retirement calculator. Also, if there’s one thing surer than death and taxes, it’s that life changes, so you can choose to keep your options open if you like.

Don’t sleepwalk into a tax bill

Be wary of creating a big tax bill. You’ve now the option to take certain types of pension as a lump sum from age 55, but be careful, you could be sleepwalking into a tax bill as high as 45%. Just bear in mind new flexible access rules mean you can take money out gradually, which helps you to be smart when it comes to tax.

Be vigilant

It’s also worth keeping an eye out for scammers too. Fraudsters may cold-call you to tempt you into taking your savings in one go and invest your money in something with apparently high returns. Don’t feel pressured into making any snap decisions – if it’s too good to be true, it probably is. The Pensions Regulator has more information about how to spot a scam.

6 April isn’t a deadline

There’s no rule which says you have to start to take your pension at age 55. The longer you work and keep saving, the more time you’ll have to build-up enough to last you in retirement. And the magic of compounding  can do its job for longer, helping to boost your savings too.

Get the full picture

If you’d like more information on the changes to pensions and how you might benefit, it’s well worth using the Money Advice Service or check out our ‘Get ready for retirement’. Also my video ‘7 things to know about pension reforms’ will help give you some valuable pointers too.

So take your time, look at what’s available, use the guides and tools on hand, and don’t forget we’ll be #ReadyWhenUAre

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The information in this blog or any response to comments should not be regarded as financial advice. A personal pension is an investment. Its value can go up or down and may be worth less than you paid in. Laws and tax rules may change in the future. The information here is based on our understanding in April 2015.