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Confused by Pensions?

We may be about to celebrate the second anniversary of pension freedoms but that doesn’t necessarily mean that we fully understand them. In fact, a recent survey by Prudential revealed that 67% of those aged over 55 are still uncertain what the changes mean for them.

With 55 being the age at which people can start to take advantage of the pension reforms, this lack of clarity relating to the options available could mean that people are in danger of making retirement decisions which may not be in their long-term best interests. Uncertainty over tax freedoms combined with increasing retirement ages led to 77% of those questioned in the Prudential survey indicating they would prefer the Government to put a halt on making any further changes to the pension system.

Certainly pension freedoms have been well received with nearly 550,000 people accessing over £9 billion in funds. However, when the scheme was first introduced it was anticipated that it could generate tax revenue of £900 million between April 2015 and the end of 2016 but this figure is now expected to be some £2.6 billion.

We do not have the breakdown of how much of that relates to the enthusiastic take-up of the new pension freedoms and how much to individuals misunderstanding the tax impact of pension withdrawals. But the uncertainty revealed by the survey highlights the importance of understanding what pension options are available and how these are likely to affect an individual’s personal tax situation before making any decision.

If you’re looking for pensions or investment advice, or if your situation has changed and you may therefore need to review your existing investments, contact Beckworth by using one of the links on our website.