News and blog

The importance of understanding the ‘taxing’ pension reforms

As of next year, 200,000 people are set to cash in their pension pots all in one go, according to a survey by Ipsos Mori, a leading market research company. From much needed home improvements, to a dream holiday, the relaxation of the UK pensions systems will see savers do as much or as little as they wish with their hard-earned savings. However, the research of 1000 adults with a pension fund also highlighted widespread ignorance on how much tax is payable on such withdrawals.

Register for the NS&I ‘Pensioner Bond’ email alerts

In January 2015, the NS&I are launching a new Bond for investors aged 65 and over. First announced during the Chancellor's Spring Budget, the eagerly awaited 'Pensioner Bond' is expected to pay nearly double the rate on offer from banks and building societies for either a 1-year and 3-year term. The exact rate available will be announced during the Autumn Statement.

What is stopping the over-50s investing?

During a period of low interest rates, the possible returns generated from considering alternative investment avenues can tempt even the most cautious saver. However, when push comes to shove, many savers frequently steer clear of adopting alternative investment methods to boost their retirement fund, instead opting for the security-net of poor performing saving accounts.

Pensioners to receive free retirement guidance

Towards the end of July, the government confirmed that "savers are to receive free independent guidance when given unfettered access to their pension pots from next year." However, after the news was announced, Radio 2 morning news used the headline "Free independent advice for pensioners". If the BBC doesn't know the difference between guidance and advice, there is no hope for anyone!

New pension transfer relaxation creates a short window of opportunity for those ‘at retirement’

Certain older pension contracts give the policyholder the right to higher than 25% Tax Free Cash and until now transferring away from these types of contract generally meant giving up the right to the higher lump sum.

However, for the time being, restrictions are being lifted, which could preserve tax free cash amounts, which are greater than 25% on transfer. Until April 2015, some policy holders can transfer to a new provider on their own without losing their lump sum protection, as long as they transfer all their rights from the old pension in one go, the transfer happens before 6th April 2015 and all tax free cash under the new pension is taken before 6th October 2015.

Reminder – New ISA limit of £15,000

With interest rates at a record low, it is often rare for savers to receive some good news. However, there is a light at the end of the tunnel. July marks the beginning of the new ISA (NISA), which means that the annual amount that can be saved into an ISA is now 30% more than last year, a total of £15,000. Furthermore, there is now no limit on how much that can be invested in cash within the £15,000 limit.  

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