Since April 2015, the choices facing those looking to access their pension savings have widened. Pension flexibility rules allow unlimited access to your pension once you have reached the minimum pension age (currently age 55).
Most personal pension schemes will provide tax-free lump sum equivalent to 25% of the fund. Beyond that, any withdrawals or income is taxed in the same way as any other income.
In practice, accessing pension savings usually takes one of two routes:
The pension company who hold your pension savings before retirement may contact you with a proposed annuity rate, but it is important to get advice at this point as other providers may offer a better rate. In addition, if you have health or lifestyle factors that the insurance companies involve might consider life-shortening, you are likely to be offered a more attractive annuity rate.
If you have a DEFINED BENEFIT SCHEME (also known as a final salary scheme) such as is often found in the public sector or large companies, your pension benefits are calculated according to your length of service and salary. See our Defined Benefits Scheme page for your retirement income options.
Choosing a retirement income option is a big decision, and is often an irrevocable one. We strongly recommend that you get good independent advice before making up your mind. Contact us to arrange a free initial consultation to discuss your options.
The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. The tax treatment of investments depends on individual circumstances and is subject to change.