We find most clients recognise how tax efficient pension contributions can be for them and their businesses BUT.
Yes, there is always the buts – When can I draw my cash? How much can I draw? What if I don’t want to buy an annuity?
Currently investors aged 55 or over can take a lump sum tax free payment of 25% of their fund. The rest can be drawn annually as taxable income using draw-down provisions or buying an annuity. There are rules in place that then cap this income.
That is now all changed. From April next year pensioners can take their whole fund as a lump sum, the first 25% will still be tax-free, the balance taxable.
The proposals are subject to consultation but we believe this takes away one of the most regularly cited obstacles to setting up or increasing contributions to a pension.
Not only may it encourage increased saving but will mean big changes in the annuity market. In fact, will there even be one?
We will keep you updated of news on these pension changes up to the introduction.