Sweeping pension reforms announced by the Chancellor in the 2014 Budget came into effect in April this year.
The liberalisation of how benefits can be taken from many UK pensions - with no limit on how much can be drawn from the pension fund (subject to income tax*) - has been widely reported and covered in previous editions of Wise Words.
Another significant aspect of this reform is the way death benefits have changed for many UK pensions. The details emerged at the end of 2014 and have received less widespread publicity. The new rules are summarised below:
These new rules are simpler and in virtually all circumstances, more tax-efficient than the old rules.
The pension policyholder should review the nomination of beneficiary or beneficiaries under their pensions in light of the new flexibility available. Remember most pensions are trust arrangements and the beneficiaries on death are not determined by the provisions of the policyholder's will.
These reforms do not affect all types of pension in the way described above. Take professional advice and remember not all pensions are the same and will need to be looked at individually and in the context of the individual's personal and financial circumstances.
Wise Financial Solutions offer a free initial meeting and this can be arranged either through your usual Wise & Co contact or directly with our Wise Financial Solutions consultants:
For further information please contact Martyn Lodge at Wise Financial Solutions on 01252 711244.
Note: * Assumes that any tax free cash lump sum has already been taken. Early call for employers on automatic enrolment.