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The 2014 budget announced some rather unexpected and unpredicted widespread changes to the pension industry. The new rules have been designed to give savers greater and more flexible control over their savings when approaching retirement. The changes also abolish pension “death tax” and new restrictions on private pension contributions.
From 6th April this year, the Government will introduce changes to pensions, giving customers more options when taking benefits from their pension pots.
The Government is introducing new rules for how people can access their pension pots. From age 55, you will have more choice when taking benefits from your pension pot, although you may have to transfer to another suitable pension product in order to access the full range of options.
From 6 April 2015:
In the 2015 budget, with regard to Pensions, George Osborne announced four key reforms that would greatly benefit those with savings and investments. The Lifetime Allowance will reduce from £1.25 million in 2014/2015 to £1 million in 2016/17 but will rise with inflation from 2018. Around 5 million pensioners will be given access to their annuities. There are also plans for more flexible ISAs to allow savers to keep tax benefits when they take money out and put money in.
Also mentioned was the creation of the “Help to Buy ISA”. This is to help first time buyers save for a deposit. The Chancellor announced that for every £200 saved, the Government will top it up with an additional 25% tax free bonus. The bonus will be calculated and paid when the borrower buys their first home. There is a maximum initial deposit of £1,000 and the maximum monthly deposit is set at £200. The Government will contribute a maximum of £3,000 on £12,000 of savings.
For more advice on your pension, or if you need independent financial advice, please get in touch!