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Pensions: What happens to my annual pension allowance once I take money out?

From next April 2015, the chancellor wants you to be able to do what you like with your pension savings once you reach age 55. With the new freedoms come a set of new rules that can be confusing. Enable’s retirement planning advisors in Bishop’s Stortford want you to be aware of any pitfalls in the new system.  Another thing to be aware of is that once you have taken money out of your pension savings beyond just the tax-free lump sum, the amount you will be allowed to put into pensions in future will be significantly reduced. If you take only your tax-free cash and nothing else, then your annual allowance stays at £40,000 a year. However, as soon as you take money out of a flexi-access drawdown account, or make just one bank-account style withdrawal, you will not be allowed to put more than £10,000 a year into a defined contributions pension scheme again.  (NB Those who have a final salary-type pension will still be able to contribute £30,000).

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The new pension rules may seem exciting but as with everything they come with conditions and if you don’t really need to take the funds out  or your pension and want to have the chance to build up more pension, Enable’s IFA’s of Bishop’s Stortford would suggest thinking very carefully before you take more than your tax-free cash lump sum. There is much to think about in the brave new world of pensions Enables IFA’s wan to help you make the best decisions for you.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 – Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

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