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http://www.bbc.co.uk/news/business-29799942
Up to 200,000 people are set to cash in their pension pots all in one go next year, according to new research.
From April 2015, all those over the age of 55 will have the freedom to take all their savings out of their pension fund, if they wish.
As many as 12% of those with pension savings will do so, says the investment adviser Hargreaves Lansdown.
In response, the Treasury insisted that people should be free to do what they like with their pensions.
If the estimates prove accurate, the government could be in line for a tax windfall of up to £1.6bn.
But the research also showed widespread ignorance on how much tax is payable on such withdrawals.
Only just over a third of those questioned in a survey knew how much tax would be deducted if they cashed in a medium-sized pension pot.
Those with larger savings were even less likely to know what their tax bill would be.
Up to 200,000 people are set to cash in their pension pots all in one go next year, according to new research.
From April 2015, all those over the age of 55 will have the freedom to take all their savings out of their pension fund, if they wish.
As many as 12% of those with pension savings will do so, says the investment adviser Hargreaves Lansdown.
In response, the Treasury insisted that people should be free to do what they like with their pensions.
If the estimates prove accurate, the government could be in line for a tax windfall of up to £1.6bn.
But the research also showed widespread ignorance on how much tax is payable on such withdrawals.
Only just over a third of those questioned in a survey knew how much tax would be deducted if they cashed in a medium-sized pension pot.
Those with larger savings were even less likely to know what their tax bill would be.
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Replies: 29
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not looked into this yet but will do
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If you do not take an annuity after taking the 25% tax free can you take a lump sum each of the following years to cut the tax liability?
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Going to be in for a shock when their is not enough money in the pot to return to the investors.
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market value reduction protects the insurance companies from that ^^
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as far as i see it the only way for those on low to middle icomes with pots of up to 100 grand can benefit and avoid tax is to,
retire at 60 and if the personal allowance has risen to 12, 13 grand say ,take this much per year till your 66,that way with 25% tax free you,ll get the lot tax free, obviously you,ll have to be able to manage on 12 grand 25 if your spouse has similar circumstances,wait till your 66 and your state pension takes up most of tax free allowance,its a bit of a con by gideon to get his hands on your tax as quick as possible |
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I'm in
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One of the tories better ideas this - the status quo basically meant that insurance firms just cleaned up on huge pots when people died - for men, the annuity rates were so bad compared to life expectancy, they would have to live to 85/90 to see a return on their money in cash terms, while the annuity provider kept all income earned on the pot - a complete joke
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last act of desperation by the government because every other way to prop up the economy has been used already.
this will only mean more benefits paid out in 12 years or so. |
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1st time poster, if you have saved in an ISA also, then this should supplement your retirement. Also many will also have some part of their pension as a final salary pension, so it would take longer for those to get their pension out without paying income tax. It seems the personal allowance for those aged 65-74 which was a little higher has come to an end.
For the last few years of your work life it may be worth considering the balance of pension/ISA contributions. |
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I'd also assume that many will carry on investing in their retirement with more going towards "safer" investments.
I did not think that you could knock out the lot. I thought you needed to have 12K per year income and you could choose to squander the rest. https://www.gov.uk/government/news/budget-2014-support-for-savers-announced |
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From April 2015 anybody can take whatever they want, subject to their highest marginal tax rate.
Poorhouses for the elderly predicted within 20 years, nobody has a crystal ball and so how can you know that you won't run out of money? The State pension is already being scaled back with SRA rising and maximum pensions falling in recent years. Nothing wrong with the current minimum income requirement of £12K imv, down from £20K this year. At least it ensures that people can afford to rip out this cash. However, it's a policy entirely in keeping with the Conservative tradition of not 'nannying' the people, it's your money, you can do what you want. |
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Stow, if I had ISA money, I'd be seriously considering shifting it into a pension. With the removal of 'death tax' for over 75s on pensions, then those funds would be IHT free until that age. ISAs would be added to the deceased estate.
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good idea.
take you pension out at 55. spend it. then live off state pension and benefits till you die. shift the burden to make yourselves look good now. it like the council housing sell off and privatisation. fkin clowns have ruined the country |
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Yes outrageous to allow people access to their own money.
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It's not just their money though is it? 20% is as a result of tax relief given on contributions, the price you had to pay for that tax relief was strict rules regarding how you took it.
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public sector pensions do not apply
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public sector pensions do not apply
Keeping everybody else's pension down. |
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Treating the general public like adults?
Bound to end in disaster |
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I heard that the charges for taking your money out early will be quite high.
Anybody else heard this? |
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What you can do is to "Vest" the fund, where you take out an amount to suit you, and leave an amount in the pot.
You cannot pay in further but they will pay you an amount monthly, whatever your age at the time. |
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hard to believe that 15 yrs ago a 100 grand pot got you over 15 grand and now struggles to get you 6,
even harder to believe that in those 15 years governments and pension providers have bombarded people with advice to get involved |
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its hard to believe cos it isn't true - there's no way £100,000 would have got you £15,000 pa annuity 15 yrs ago unless you had serious medical issues
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No difference to me 1stTP as mine was linked to a %age of my salary.
Be loads in that situation. |
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If the estimates prove accurate, the government could be in line for a tax windfall of up to £1.6bn.
Excellent. They can keep the whole of sub-Saharan Africa going for another two weeks on that. |
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It will cover our deficit for about half a week.
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I assume that you can't draw it all out if you are part of a company scheme with a large deficit
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It doesnt affect schemes based on a percentage of salary just personal ones that actually have its own pot of money.
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Good. That Royal Mail safe for a while longer then.
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^ that's wrong. He means BT.
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