More on the Pension Changes; What to do now

There are still many uncertainties about the fine detail of the new flexible pension regime, which makes giving definitive advice difficult. However, you should be starting to consider a number of questions as the new framework takes shape

if you are approaching or at retirement...

  • How important is a guaranteed retirement income to me? You may no longer be forced to buy an annuity, but this type of investment does have the virtue of providing a guaranteed income for as long as you live.

  • How important is a retirement lump sum to you? If you do not need an immediate lump sum, and your pension provider allows it, from April 2015 you may be able to make regular withdrawals from your pension to provide income, with 25% tax-free and the remainder taxable.

  • How will my funds be managed if I choose drawdown? Your investment strategy may need to change, but how will depend on the levels of withdrawals you want, your appetite for risk and your ability to cope with a fall in your drawdown income.

  • Should I claim individual protection? If the value of your benefits is over £1.25m, you could be facing a tax charge of up to 55% on the excess, despite the Chancellor’s reforms. There is still scope to protect against this potential tax charge.

if you are some way from retirement...

Does my pension investment strategy need to change? If you are now thinking of drawing on your pension fund in retirement rather than buying an annuity, your pension investment approach will almost certainly need a review.

Should I transfer my old pension benefits? This could be a final opportunity to move some old benefits to gain the new flexibility, but any decision to do so first requires a detailed analysis of all your options.

How does the reduction in the lifetime and annual allowance affect me? The lowering of both allowances could mean you need to revise the timing and size of pension contributions.