Pensions Simplification

The 6th April 2006 was a big day for pension provision. It brought radical and sweeping changes to the way pensions are funded and taken. The objective of the Government legislation was to simplify pensions. In some ways it did but, as usual, the law of unintended consequences started to have an impact. This resulted in changes as the law was progressing through parliament. These changes increased the complexity, something which they were trying to avoid. End result? Confusion all round!

Here is a snapshot....

On the plus side:

  • The majority of pensions much simpler
  • Pensions are much easier to understand.
  • Full concurrency (i.e. being able to pay into any array of plans you wish), subject to the annual allowance
  • Wide investment flexibility
  • Up to 25% Tax Free Cash will be available from the majority of pension schemes
  • Most customers now have greater flexibility in the size and timing of their contributions.
  • Flexible options at retirement when deciding to take benefits
  • You don't "have" to buy an annuity at age 75
  • Can commute a small fund if it is all you have

On the minus side:

  • Early retirement age changes in 2010 to 55 instead of 50. This means that you cannot, after 2010, take 25% of your fund until age 55

Remember the complexity mentioned above. Pension planning should be something simple but it is not and should be undertaken with professional advice to ensure you don't fall foul of the rules

Ring us on 0121 602 1602 to arrange a review of your pensions