8th October 2015 at 2:01pm
It’s been six months since the biggest changes to pensions in a century came into effect. Now that the freedoms allowing the over 55s to access their pension savings are firmly in place, it’s worth looking at how things have changed since April.
Pensions: What’s new?
Most people used to have to buy an annuity (a fixed income for life) when they retired to be able to take 25% of their pension savings tax free.
That’s no longer the case. The new pension rules allow people to stay invested and take 25% of their savings as tax-free cash, paying tax on anything above that, depending on their income.
Another major change is that pension wealth can now be passed on down the generations, sometimes free of tax. You can read more about that here.
Most people are choosing to keep their pensions invested
The new rules mean, more than ever, that people need to make informed decisions around how and when they choose to access their savings.
Despite media headlines earlier this year suggesting many would rush to spend their pension savings – and potentially leave themselves without enough money to see them through their retirement – we know that most of our customers (94%) who can take money from their pensions are choosing to keep their pensions invested.
A minority (6%) of those who are able to access their pension and have taken some or all of their pension as cash have spent their money on things that matter to them.
A minority (6%) of those who are able to access their pension and have taken some or all of their pension as cash have spent their money on things that matter to them. Some are taking the opportunity to repay their mortgage or debt, improve their home or help their children get a foot on the property ladder. Others have spent their money on once-in-a-lifetime holidays or family weddings.
The run-up to the pension freedoms was an exciting time for everyone at Standard Life – it gave us an opportunity to look at what we offer, adapt where we needed to, and really make a difference for our customers.
We created our first-ever solution for customers to login, plan, access and manage their pension money online. It’s a quick and easy way to put people in control of their savings, work out how much cash can be taken out tax free – and what tax needs to be paid over and above that.
It’s all about giving our customers the control they need to manage their money how they choose. And that is what the pension freedoms are all about.
How to get the most out of your retirement
Join the conversation
If you’ve recently taken money from your pension, we’d love to hear about your experience. Join the conversation on our MoneyPlus Community or follow us on twitter @sl_moneyplus and Facebook and let us know all about it.