Your money-making expert. Financial journalist, TV and radio personality.
I was on Good Morning Britain and Sky Sunrise this morning explaining the implications of George Osborne’s new announcement that people can take out bits of their pension from age 55 and still get 25% of it tax free.
The deal is that as of April 2015, you have been able to take out bits of your pension regularly and each time you draw money out, 25% of it will be tax-free.
The rest will be counted as part of your taxable income.
It used to be that you had to buy an annuity with three quarters of your pension pot when you retired, but now you are able to do what you like with the money.
In fact, you don’t have to take it all in one lump at all. You can take the pension out in bits just like you might if the money were in a bank account.
Potentially yes, although it’s also a bit dangerous if you’re not a disciplined sort and you suddenly want extra cash in your late 50s. We’re all living longer (good thing) and that means we need more money to provide for our long retirements (not such a good thing).
(a video that Jasmine made back in 2015)
The more information you have, the better. Pensions are a complex product already and all the new changes makes it even harder to know what the situation is and what you should be doing about it.
One thing to keep in mind is that although this Bill will probably be made law, it doesn’t mean that the actual pensions companies will play ball. They could refuse to allow you to draw regular amounts from your pension pot or they could charge such high fees to do it that it won’t be worth your while.
The Government is offering all new pensioners a free guidance session before they make decisions about their pension pots so make sure you take up that offer.
Also, though, if you’re still confused it will definitely be worth paying a proper, independent financial advisor for help on what to do with your money. If you have a lot of cash in your pot it could be worth getting a good tax accountant to give you some advice too.
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