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The Government has dramatically changed pensions legislation with effect from April 2015.
From that date :-

  • You will continue to get tax relief on contributions i.e 20% – 45% will be paid by the Government.
  • On retirement you can get 25% of your fund out tax free, up to the lifetime allowance ( currently 1.25 Million).
  • You can take the remainder of your fund out as and when you choose. Of course you will have to pay the appropriate taxes on withdrawals as and when you take them, but you do NOT have to buy an annuity. This enables you to draw the entire fund out on retirement, or leave it there to grow ( tax free until withdrawal) or anything in between.

An alternative investment is an ISA ( up to £15,000 per annum). The drawback to an ISA is that you do NOT get tax relief as you invest. Therefore the investment fund  (and consequently any growth) are smaller. The major benefits versus a pension are that you pay no tax when you make withdrawals and you can withdraw it at any age versus 55 minimum for pensions.

We encourage investment in both these mediums to provide for retirement.

Pomfrey & Co Accountants Ltd
17th June 2014.

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