In your 60s – what do the pension changes mean for you?


Julie Hutchison

15th May 2015 at 10:53am

Thanks to the new pension freedoms, you have much more choice and flexibility over how you can take your pension money.

Take tax-free cash followed by a flexible income

One option is to take your tax-free cash, then take a flexible income. This means you can change the amount you take out of your pension. Your pension savings will also stay invested, giving them the potential to keep on growing, but remember you have to accept stock market ups and downs.

Fix your income

You could choose a fixed income that’s guaranteed for life. Generally, the older you are when you buy an annuity, the better the rate you get. So you could even choose to start with a flexible income, and then move to a fixed income later.

Pass on what’s left in your pot, free of inheritance tax, when you die

The new pension rules mean the old 55% death tax charge has been scrapped. This means if you die before age 75, your pension savings are passed on tax-free. And if you die after that age, the rate of tax that is due will depend on the income tax rate of the beneficiary – this could range from 0% to 45%.

These changes mean that pensions are more likely to be passed on, allowing wealth to be shared more easily.

Have a defined benefit pension?

If you have what’s called a defined benefit pension, you’ll normally have the choice of taking some tax-free cash, then a fixed income is paid to you – this could increase each year.

Make sure you take the time to learn about the changes to pensions and find out how you can benefit. There are a variety of online guides and calculators available to help you understand your options.

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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 May 2015.