Savers will be able to enjoy more flexibility than ever when the new pension freedoms come into force, but everyone must remember that date is not a deadline, says investment platform provider AJ Bell.
“Savers should take their time, not least because 6 April is Easter Monday and therefore a Bank Holiday”, says Mike Morrison, Head of Platform Marketing, AJ Bell. “There is little point in dashing to take benefits and only then deciding what to do, not least because this may limit their ability to make further contributions to their pension pot. Those still looking to save into their pensions need to think about what they really want to achieve and may wish to maximise their pension contributions before they start to flexibly access their benefits so they can make the most of the Government-approved tax advantages on offer.”
Notes for Editors
- Since last March's Budget, the Government has outlined a series of pension reforms which are due to come into force from 6 April 2015.
- The current annual allowance for pension contributions is a maximum of £40,000 per year, although savers can make use of any unused allowance from the previous three years.
- Once benefits are flexibly accessed, savers will only be able to put £10,000 into money purchase schemes each year and lose their unused allowances from earlier years, unless they take only the tax-free lump sum and no income.
- Contributions to defined benefit schemes can still take the annual total to £40,000.