Pension freedoms and flat rate tax:
“The Chancellor’s plans to introduce pension freedoms are due to go live for those approaching retirement from April 6th. A great piece of news is that he is extending pension changes from April 2016 to allow 5 million existing pensioners to swap their annuity for a fixed lump sum if they so wish (although no-one should act in haste). The proposals will create a much fairer landscape where people have the freedom to do what they want with their savings and shape their own retirement.
“However, as much as these pension freedoms are welcomed, it does mean more people are at risk of getting it wrong, especially as the reduction in lifetime pension allowance brings a new group of people closer to the limit. It’s clear that taking professional financial advice to help plan for retirement has always offered the best outcomes for consumers, and these extended changes mean that many people who thought their decision-making time was over may be faced with further important decisions to make, for which they are not properly equipped. The new tax legislation in particular is important – our research earlier this year with Prudential found that £2.9 billion is wasted in pensions tax relief each year, so we know that people aren’t using these vehicles to their fullest. Tax planning is one of the areas in which a financial adviser can make the most difference, so together these reforms should go some way to making sure people are better prepared when they do get to retirement.
“I’m pleased the Chancellor is putting control back in the hands of consumers. We now need to ensure that people understand how to make the most of their money once the ‘safety net’ of annuities has been removed. If you’re approaching retirement then professional financial advice can help you achieve the best outcomes in the long term, so your next step should be to seek out one of the thousands of advisers who specialise in pensions.”
“unbiased.co.uk can help you prepare for a first meeting with an adviser. You can download our pre-retirement checklist, Find an Adviser checklist and Cost of Advice guide and book a free introductory meeting with one of the 24,000 advisers listed on our site”
“The financial freedoms that the new ISA flexibilities bring are a welcome step that give people another route to making the most of their money. Our research with Prudential found that people are currently set to waste £1.3 billion in ISA tax savings this year, but with the option to dip in and out of a flexible ISA, consumers can more actively engage with cutting their tax waste.
“The Help to Buy ISA brings new options for young people to consider as well, as they make their first step towards buying a new home. These rewards of government savings support are a welcome positive step to get young people involved with financial planning.
“With these extra freedoms come extra decisions to make, with no single approach suiting everyone. This is why tailored financial advice can help make sure that people are maximising their allowances, and moving their money as efficiently as possible.”
For more information contact:
Anna Schirmer/ Sarah Tye/Calum MacDougall, Lansons: 020 7294 3682
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