This year, the government has introduced radical changes to the existing pension system which could have an effect on your pension planning. One of the main changes was the introduction of “pension freedom”, to begin in the 2015/16 tax year. Essentially, this means that anybody aged 55 or over can take the entire amount of their private pension as a lump sum, paying no tax on the first 25%. The rest of the sum will be taxed as if it were a salary at their particular income tax rate.
It was stated that the reason for these changes was to offer more choice, giving people the chance to invest their pension money in areas such as buy to let property and enabling people to expand their pension. Although the changes could be beneficial for some people, they also mean it could be easier to make a mistake or an unsuccessful investment which could have effects that last long into the future.
It could be beneficial to take some of your pension pot to invest in other areas, but it may be in your best interests to leave the pension invested for when you need it. The best route will depend on your individual circumstances, so it is always a good idea to consult financial specialists who can provide you with useful advice and guidance.
Pension planning is one of our areas of expertise, and we will be on hand to help you deal with all the changes taking place in the world of finance and pensions, no matter what comes up in the future. Our financial advisors in Middlesbrough can advise you on the best course of action to take as you consider retiring from the world of work and moving into the next stage of your life. No matter whether you are about to retire or are making a plan for the distant future, we are ready to discuss your options with you, so get in touch.