Pension Changes for 2015
The Chancellor, George Osborne has announced that new pension rules would allow six million people to sell their retirement annuities for cash which will be introduced on 6 April. In the past, the pensioners were allowed to put their pension into annuity only and not allowed sell it.
However, the phone line for booking sessions and appointments is still not yet opened for the people over-55s to cash in their pensions savings or keep an annuity.
According to the Chancellor, the new pension changes are:
• People aged 55 and over can withdraw any amount from a Defined Contribution (DC) scheme
• Families will be at advantage as pass pension savings can be easily passed on due to tax changes
• People with Defined Benefits (DB) schemes will be allowed to transfer to DC plans
• Government's Pension Wise service will be accessed for all the retirees
• Existing annuity holders are unaffected at present
This reform on pensions announced by the Government have given people the freedom to do whatever they like with their money. However, selling an annuity for a lump sum carries similar risks and could damage people’s pension prospects from the original annuity purchase.
Even after such announcement, the pension consultants are still bit hesitant about this practice because it can bring in extra costs to the schemes. And, their opinions are widely circulated among the pension industry.
The withdrawal amount from a pension will be treated as income so taking a big sum will only put the pensioners in a high income tax bracket. Thus, all the pensioners should consider this before making the decision of withdrawing amount.
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