The recent changes that came into effect from April 2015 have increased the options for Defined Contribution schemes members as to how you can take your pension benefits. Pension pots can usually be accessed from age 55 regardless of whether or not you have stopped working. There are a number of options, including the following:
- Take your pot as cash all in one go
- Take smaller lump sums as and when you wish
- Enter into a flexible drawdown arrangement where the pot remains invested to provide either an income or regular withdrawals as required
- Purchase an annuity to provide a fixed or variable income for life or a fixed term
Whichever option or options you choose, you will be able to take a tax free cash payment of 25%, however any other income or capital withdrawals will be subject to tax.
With greater flexibility comes a greater responsibility to ensure that you pick the right option, or combination of options, that match your requirements whilst minimising your tax liability. If you require further information or would like to receive a guide to your options, please contact us.