Radical changes to UK pensions agreed

From April 2015, UK investors will have all new freedoms regarding when and how much they can take from their UK pension investment pot

 
The UK government have made some further radical changes to the pension system, over and above SIPPs, which will become effective from April 2015.

What this means is that after April 2015 any investors in a pension who are aged at least 55 will have significantly more flexibility over the way in which they take income from their pension.

They can now take all the fund as a lump sum and then spend, save or invest it further in any manner they see fit.

The first 25% of an early withdrawal will be free of any tax. The remaining sum withdrawn is subjected to income tax at the investors highest marginal rate.

A potential downside for early withdrawl, could be that the added “income” drawn from their pension would be added to all other incomes, such as salary – meaning someone in the basic 20% tax band could move up to the higher 40% rate or in worst cases the top 45% banding.

A way round this problem would be withdrawing from the pension in tax-efficient stages – although advice from a qualified expert should be sought as to the best way to do this. It will of course be possible to withdraw the tax-free 25% immediately and leave the remaining 75% to the investors pensionable age.

For investors with a Gold SIPP – 25% of your bullion can be sold if market conditions are favorable, or converted to other types of precious metals investments not currently acceptable in a SIPP – such as silver, platinum or palladium bullion bars, bullion coins or numismatics.

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