Pension freedoms

Major shift in how you can access your pensions

New rules about pensions came into effect on 6 April 2015, providing more choice for anyone who has a private or occupational money-purchase pension.

You can withdraw some or all of the money held in a money-purchase workplace or personal pension. This is providing you are over the age of 55 and have not already begun to draw on your pension or bought an annuity.

While you can still convert your pension into an annuity or invest it in a drawdown product, the new rules also enable you to withdraw the entirety of your pension, either as a lump sum or a series of withdrawals, subject to Income Tax above the first 25%.

However, bear in mind that if you withdraw too much from your pension in one go, it could move you into a higher Income Tax bracket.

From the age of 55:
• You can take a pension commencement lump sum, and/or;
• Start taking your pension income at any time, even if you are still working

You may start taking a pension income before age 55 only if you are forced to take early retirement through ill health or you have a protected pension age.

Since April 2015 (subject to your pension scheme rules), for most pension investors aged at least 55, you will have total freedom over how you take an income or a lump sum from your pension.

• You can choose to take your entire pension pot as cash in one go – 25% tax-free and the rest taxed as income
• Take lump sums, as and when required, with 25% of each withdrawal tax-free and the rest taxed as income
• Take up to 25% tax-free and then a regular taxable income from the rest. Either via income drawdown (where you draw directly
from the pension fund, which remains invested and is known as a ‘flexi-access drawdown’) or via an annuity (where you receive a secure income for life)
• A combination of the options