What do pension reforms mean for you?

Highlighter pen highlighting the word retire


MoneyPlus Features Team

8th January 2015 at 2:53pm

With the biggest pension reforms in a lifetime just months away there’s huge change ahead, but how many of us can be sure how these reforms will affect us personally? The answer is just one in five, according to our research.

The knowledge gap

“A good decision is based on knowledge and not on numbers” – Plato

So that we can support customers through the April pensions reform we’ve being doing a spot of research and with less than 150 days to go until the reforms land, the findings are worrying.A good decision is based on knowledge and not on numbers

Our research highlighted a significant gap in people’s knowledge, with a quarter of those approaching retirement totally unaware that anything is changing, and nearly four fifths unsure what it will mean for them.

Nearly half of adults aged 50 to 65 are indifferent to the upcoming reforms, and almost one in five confused about what it all means and how the changes might affect them. Even when asked about the specific changes, a resounding 86 per cent of people didn’t know that a pension can be passed on tax-free from April 2015 if you die before the age of 75.

Bridging that gap

The way we think about our pensions needs to radically change, as they are about to become flexible savings plans. For those approaching retirement it’s particularly important to understand how the changes will affect you.

To spread the word we’ll be sponsoring a number of local events and running a series of retirement events. For those who want more info on how the changes could affect them, and to look at some of their options, our website now has a dedicated section to help guide you through the reforms www.standardlife.co.uk/ReadyWhenUAre

We also thought it would be helpful to give you a snapshot of the pension reforms and we’ve pulled together our top five things to know come 6 April:

  1. You’ll be able to choose how you take income from your pension savings. You can opt for either a guaranteed income for life (an annuity) or a flexible income, where you can start, stop and change what you take out (drawdown).
  2. You’ll also be able to start with flexible income and later opt for fixed income, if you prefer.
  3. The 55 per cent ‘death tax’ on pensions is being scrapped. For some people, their pension savings will be passed onto their loved ones tax free – if they die before age 75.
  4. You don’t have to stop work and retire before you start to access your pension savings. It will be possible to take some money out of a pension from the age of 55, but keep working and paying into a pension so that it continues to grow. This is good news and could help anyone wanting to pay off a debt or perhaps fund a need then keep saving, or to gradually cut back their working hours ahead of retirement.
  5. You’re able to nominate who inherits your pension, usually your Will doesn’t control this, from April 2015 ensuring you have an up to date Beneficiary Nomination form to help state your preference will become even more important. Your pension company or financial advisor can help you with this.

Knowledge is power

The decisions we make about retirement have far reaching consequences and there is no one size fits all. We encourage everyone to find out more and think about how you can make the most of your savings.

As the Chinese philosopher Confucius once said ‘to know what you know and what you don’t know, that is the true knowledge’.

Join the conversation and follow us on twitter @StandardLifeUK and Facebook.


Remember, pensions are a long-term commitment and the value of any money you keep invested can fall as well as rise and could be worth less than you’ve paid in. Normally 25% of your withdrawals are tax-free and you may have to pay tax on the rest. Tax rules can change – so stay up to date.

This blog should not be regarded as financial advice