SAVERS are rapidly rethinking their strategy for retirement as yet more changes to pension rules are set to open up a new range of options from next April. The latest plans, flagged up by the Chancellor earlier this autumn, will allow the families of millions of savers with money purchase pension funds to inherit the remaining value of pensions that have already started being paid.
SAVERS are rapidly rethinking their strategy for retirement as yet more changes to pension rules are set to open up a new range of options from next April. The latest plans, flagged up by the Chancellor earlier this autumn, will allow the families of millions of savers with money purchase pension funds to inherit the remaining value of pensions that have already started being paid. This legacy will be tax-free for beneficiaries of those who die before their 75th birthday. David Williams IFA, the Northampton-based Chartered Financial Planner, is already advising clients on how to prepare for the new freedoms. The pension is now in play as an asset that has an inheritable value, and could be handed down to children rather than dying with the saver. More details of the Government plans are likely to be published alongside George Osborne’s Autumn Statement on 3 December. Next April is also going to see the introduction of radical new options for pension flexibility. This means savers no longer have to use their funds to provide a regular income, but can draw lump sums from the fund as and when they like. The combined impact of these reforms is only starting to sink in. On the one hand, savers will have much more freedom to dip into their pension savings. On the other hand, money they draw out, but then invest elsewhere or gift to family, may be taxed on their death, whereas if this was left in the pension it could potentially pass to their heirs tax-free. There could also be some disappointments along the way. Not every type of pension plan will allow savers to capitalise on the new rules. And those who want to switch to a more accommodating scheme, may risk leaving it too late to move. Company final salary pensions can prevent transfers out within 12 months of retirement, for example. The changing pensions jigsaw means that quality financial planning has never been more important. Find out how one of David Williams IFA’s team of highly-experienced advisers can help you formulate the right pension strategy by calling 01604 621302 or contact us via www.dwifa.co.uk