Before we all head off for the Easter break (for me a bit of snowboarding followed by a Murphy clan holiday to Centre Parcs) I couldn’t miss the opportunity to have one last blog ahead of the upcoming Pension revolution.
So in case anyone was thinking about going out and buying a Lamborghini, please take a moment to read this first (It should be noted that the taxman would be able to buy a Porsche with the tax earned on that withdrawal).
I don’t want to go into any great detail as you can read about the pension freedoms in previous blogs but to summarise
Access to your entire fund from age 55
Taxed at your marginal rate
No compulsory annuitisation
Death benefits can be left to any beneficiary
Tax free on death before age 75
Taxed at beneficiaries marginal rate on death after age 75
This leaves the options as open as they have ever been when it come to retirement planning.
I think the word pension should be deleted from the lexicon, and should now be known as simply a retirement income, and family benefit account (not very catchy I know).
If you can remain invested for the rest of your life and adjust your income as your circumstances change, then leave whatever is left to any beneficiary you choose, then the dusty old pension definitely deserves a new name.
Before everyone starts calling the office requesting one of these fantastical solutions there is a serious point to this communication.
We have already seen in the press this week the sale of pension policyholder’s details to “marketing companies”.
I have spoken to members of the financial press who tell me estate agents are calling round advisers asking if any of their clients would like to withdraw money and buy property (a suggestion Iain Duncan Smith also made on TV last weekend).
This also applies to the consultation on creating a market for people to sell their annuities.
There is a huge responsibility being placed on the consumer here to be aware of all of the risks these options pose.
If any of your family or friends mentions to you over Easter break and beyond that they have received a phone call offering them money for their pension/annuity please ask them to go tohttps://www.pensionwise.gov.uk or better still speak to an Independent financial Adviser.
Please leave your feedback, comments, suggestions here and have a lovely long weekend.
This email is not intended as advice as should not be treated as such.