Pension Freedoms Leading To More Complex Retirements
Experts suggest independent financial advice for retirees.
Those who have already or who will enter retirement after April 2015 face making decisions that director at Wealth and Work, Jonathan Watts-Lay warns “can be incredibly daunting”. Retirees must avoid authentic looking scams and navigate a new, more complicated set of options.
Mr Watts-Lay explains that “in the past many people automatically bought annuities from their pension provider, even though there may have been better rates available elsewhere, so employees need to make sure they look into all their options.”
Many were unnecessarily losing out due to a fear of paying for advice or not understanding what possibilities were open to them. This has increased as new options came about as of April 2015, when all people over 55 were given full access to their pensions. Opportunities increased as it was decided that they would only face marginal rate taxes and were made able to pass on a pension tax freely.
Retirees Told To Seek Financial Advice
It is the place of Independent Financial Advisers to assess all assets and come up with the best measures to meet a clients needs.
Avoiding unnecessary tax costs is one way where seeking advice can end up saving money. As a rule 25% of a person’s pension is accessible tax free with the remaining 75% taxed as earned income. This means it may be most efficient to withdraw a smaller amount from their pension if they have the option of taking money from an I.S.A. which remains tax free to access.
Workers could also buy additional state pension provision if they are a woman born prior to the 6th of April 1953 or a man born before the 6th of April 1951. Both have the chance to top-up their state pension by a maximum of £25 per week.
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