{"id":1583,"date":"2012-05-10T13:15:43","date_gmt":"2012-05-10T12:15:43","guid":{"rendered":"http:\/\/esmartproducts.co.uk\/?p=1583"},"modified":"2012-05-10T13:15:43","modified_gmt":"2012-05-10T12:15:43","slug":"is-it-time-to-get-more-flexible-with-your-money","status":"publish","type":"post","link":"https:\/\/www.suretyfp.com\/wordpress\/?p=1583","title":{"rendered":"Is it time to get more flexible with your money?"},"content":{"rendered":"

Remove the cap on the retirement income you can take<\/strong><\/p>\n

Pension legislation is always on the move and keeping up to date with the latest changes could open up new opportunities for you in retirement. On 6 April 2011, the government announced that you no longer have to take pension benefits by the age of 75.<\/p>\n

Previously, any tax-free cash lump sum had to be taken by age 75 and a pension set up at the same time. The only alternative was if you had a big enough fund to take an income directly from it (known as income drawdown).<\/p>\n

The government\u2019s new rules affect benefits in personal pensions and money purchase occupational pension schemes.<\/p>\n

Gaining more control<\/strong>
\nMany of these changes were designed to limit what the government clearly sees as over-generous tax relief concessions. But other changes have created the very appealing prospect, for people aged 55 or more, of gaining more control over when and how they can use their retirement savings.<\/p>\n

Under the current rules, if you meet certain eligibility criteria, you can now take as much as you want from your pension, without the maximum income restrictions that apply to conventional drawdown arrangements. To be eligible for this facility\u00a0\u2013 known as \u2018flexible drawdown\u2019\u00a0– you have to show that you already have a \u2018secure pension income\u2019 of \u00a320,000.<\/p>\n

Enhanced drawdown facilities<\/strong>
\nWhile, for many people, buying an annuity is likely to remain the most appropriate method of accessing their pension income, some will want to take advantage of these enhanced drawdown facilities.<\/p>\n

Flexible drawdown could, for example, be used to meet one-off large expenditure items as they arise or to optimise your tax liabilities. It could also be a way to pass money through the generations, either by \u2018gifting\u2019 regular payments, for example into trusts, or as pension contributions to children using \u2018normal expenditure\u2019 rules so as to help avoid Inheritance Tax.<\/p>\n

Paying Income Tax<\/strong>
\nIn moving money out of your pension fund before you die, you will be paying Income Tax on such payments but at a rate that is lower than the 55 per cent tax charge payable on a lump-sum payment from your pension fund when you die.<\/p>\n

Another age-restricted benefit where the rules have been eased is the opportunity to take tax-free cash\u00a0\u2013 typically a quarter of your pension pot\u00a0\u2013 when you first start to take your pension benefits. Until April 2011, if you hadn\u2019t taken your tax-free cash by age 75, you lost the chance to do so. Now that restriction is removed too.<\/p>\n

Pension contract<\/strong>
\nDepending on your circumstances, all these changes may well sound like good news, but there\u2019s one important thing to be aware of. Just because the rules about when and how you take pension benefits have changed, it doesn\u2019t mean your pension contract will have changed as well.<\/p>\n

If the terms of your contract have not been updated to reflect the new legislation, you could find that you can\u2019t take advantage of them. You could still find yourself obliged to buy an annuity at age 75. And if you haven\u2019t taken your tax-free lump sum at that age, you could still lose the opportunity to do so.<\/p>\n","protected":false},"excerpt":{"rendered":"

Remove the cap on the retirement income you can take Pension legislation is always on the move and keeping up to date with the latest changes could open up new opportunities for you in retirement. On 6 April 2011, the government announced that you no longer have to take pension benefits by the age of… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1583"}],"collection":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1583"}],"version-history":[{"count":0,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1583\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}