The story so far with the savings revolution

savings revolution

Pensions

Julie Hutchison

24th November 2014 at 3:09pm

The Savings Revolution

With around 150 days to go until the savings revolution lands on 6 April 2015, it’s a good moment to pause and reflect on what’s changed, and what’s still to come.

More access for small pensions now

The first changes arrived on 27 March this year, when some people aged 60-plus with lower
pension savings were given more options. They could take the whole of their pension as cash if their total value didn’t exceed £30,000 and they had no other pension savings. Or they could take up to three individual pension pots of £10,000 each as cash, regardless of their total pension wealth. In either case, 25 per cent is tax free. This chart has more details.

The bigger, better ISA

And from 1 July, the ISA became supercharged and simplified with a new, higher savings limit of £15,000. There’s now just one overall allowance for the current tax year 2014/15 which can be used for cash, stocks and shares, or a combination of both. The new ISA is also much more flexible, since you can now transfer a cash ISA to stocks and shares and do the reverse too.

Pension death tax of 55% to be scrapped

In September, news broke about the 55% pension death tax being scrapped in April 2015, It’s all eyes on 6 April 2015 when the full set of pension changes landwhich we welcomed. If you haven’t already done so, it’s a good moment to review your Beneficiary Nomination form to make sure it’s up-to-date – this helps to show who you want to benefit from your pension after you’re gone.

Bring on 6 April 2015

And finally,it’s all eyes on 6 April 2015 when the full set of pension changes land. Flexible access to certain types of pension will give you more choices about how you use your pension savings. And a fixed income is still available if that’s what you prefer. But don’t sleepwalk into a tax bill – flexible access doesn’t mean you have to take it all in one go. There could be a huge income tax and inheritance tax sting in the tail if you do!

This blog and any responses to comments are not financial advice. A pension and an ISA which holds stocks and shares are investments. Their value can go up or down and may be worth less than you paid in.

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