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Wilmslow Express - - LAUGHING BADGER -

OM Togher looks at the re­cent pen­sion changes...

This April sees one of the big­gest changes to the way some pen­sions work.

The pen­sions that are chang­ing are the sort where a lump sum is built up, and this is used to pur­chase a pen­sion when you reach your re­tire­ment.

Th­ese are called ‘de­fined con­tri­bu­tion pen­sions’ or ‘money pur­chase schemes’.

The rules are chang­ing to al­low you to ac­cess your fund or your money in a much more flex­i­ble way.

At the mo­ment you are re­quired to pur­chase a spe­cial type of in­sur­ance pol­icy – called an an­nu­ity, which pro­vides a regular in­come through­out the rest of your life.

One of the prob­lems with this sys­tem is that the val­ues of th­ese poli­cies were not al­ways very good at the time when you were forced to buy them.

The old rules also only al­lowed for a por­tion of your fund to be with­drawn on your re­tire­ment.

With the cur­rent low rates of in­ter­est, th­ese poli­cies have tended to have even less value than in past years.

The new sys­tem means that when you reach the age of 55 you can start to with­draw money from your pen­sion sav­ings, as and when you like.

There are still go­ing to be lim­its placed on you by in­di­vid­ual pen­sion providers.

To help you make sure that you know what is best for you, and to help you un­der­stand your op­tions – the gov­ern­ment is set­ting up a new guid­ance ser­vice called Pen­sion Wise.

This will be avail­able to peo­ple as they ap­proach 55 years of age. (The Cit­i­zens Ad­vice ser­vice is pro­vid­ing the face-to-face part of this ser­vice.)

In­vest­ing some of your in­come in a pen­sion means that the gov­ern­ment will usu­ally make an ad­di­tional con­tri­bu­tion to your sav­ings fund by way of tax re­lief.

This is in ad­di­tion to any­thing that your em­ployer might also make.

This means that as you ap­proach 55, th­ese schemes will for many peo­ple start to be­come very ef­fec­tive ways to save.

The im­por­tant change is that you will be able to make sev­eral, and regular with­drawals af­ter this age.

One of the prob­lems with the new sys­tem for peo­ple who qual­ify in the first year is go­ing to be that not all pen­sion com­pa­nies are ready for th­ese changes.

It may mean that for some peo­ple they will need to move their fund to a more flex­i­ble provider, if they want to take ad­van­tage of all th­ese new free­doms.

This ad­vice has to be gen­eral – you should use the new guid­ance ser­vice be­fore mak­ing any de­ci­sions about your pen­sion sav­ings – and re­mem­ber that there are lots of other tax and ben­e­fit im­pli­ca­tions for the de­ci­sions that you may make.

For more in­for­ma­tion go to www.pen­sion­wise. gov.uk. If you have any prob­lems, we are here to help you. For help from Sal­ford Cit­i­zens Ad­vice visit your lo­cal bureaux in Ec­cles, Ir­lam and Cadishead, Sal­ford City, Swin­ton, Walk­den or at Sal­ford Royal.

Tele­phone our ad­vice line: 0844 826 9695 (if call­ing from a land­line), or 0300 456 2554 (from a mo­bile), which is open on Satur­days.

You can also fol­low us on Twit­ter for regular news and ad­vice up­dates, or by go­ing to www. sal­for­dad­vice.org.uk you can find out about all the ad­vice ser­vices in Sal­ford, which have come to­gether to make get­ting ad­vice eas­ier, or visit our web­site at www.sal­ford­cab.org.uk.

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