important information about pensions

Could you be more active with a Self Invested Personal Pension Plan (SIPP)?

We are highlighting a change in legislation which may affect you.

From 6^th April 2010, the Government is increasing the earliest age from which you can normally take some or all of your pension benefits from 50 to 55.  From this date, you will normally have to be at least 55 before you can take new benefits from your pension plan.

However, there is still a short window of opportunity for those between age 50 and 55 to start drawing benefits from their pension plan before 6^th April 2010. This gives the chance to take a tax-free lump sum and set up a pension income that can continue after next April even if you aren’t 55.

Another point to consider is that maintaining separate pension plans can be costly and complicated to manage.  Most importantly it can be difficult to work out the level of income you can expect to receive.

By consolidating your pension wealth into a SIPP you can make your pension easier to keep track of and reduce costs. A SIPP also brings wide investment choices, and flexible income options, that can adapt to meet changing needs.  As well as the usual option to release a tax-free lump sum, a chunk at a time if you choose, you can take a variable income (which will be taxed) directly from your fund while it stays invested with the opportunity to grow. The greater flexibility and wider investment freedom results in higher risks and the need for active investment management and investment advice. You should also remember that the value of your fund can go down as well as up, and this could affect the level of income you can take in the future. If you take income directly from the fund you will need to monitor it regularly to to make sure you don’t run out of money.   

If you would like to discuss this further then please give us a call on 01204 366300 and we can arrange a convenient time for us to meet.

We look forward to hearing from you.

Tax and legislation can alter.  The information we have provided here is based on current understanding of law and HM Revenue and Customs practice.