NEW PENSION PRODUCTS

The financial services providers are bringing out more and more new products to cater for the

changes that have been announced.

For example, for those who want to access their money now and have an income but also want the option to take it all after next April, there are now one year annuity products. These allow you to take your Tax Free Cash immediately but also allow you to exit the annuity after April next year so you can access more of your pension fund. In addition to short term temporary annuities, there are also investment-based annuities, and enhanced annuities for smokers and those with medical conditions. We would be happy to go over the options that may be available to you.

AND WHY NOT?

There are two good reasons why you might not want to take out all of your pension funds now or next year.

The first is the simple fact that if you take them all out and use them up now, they will be gone, and that could make things harder for you in your later years. The second reason is tax. The first 25% you take out will be free of tax. The rest, however, will be taxed as if you had earned it in that tax year. It is added to your other income in working out how much tax you have to pay.

If you have an income of £10,000 you are likely to be paying no tax. If you then take £30,000 out of your pension fund, £7,500 is free of tax, but the remaining £22,500 is treated as income and would then put your total income up to £32,500. That means all of the £22,500 would be taxed at 20% (£4,500).

Taking even larger sums out of your pension fund might mean paying even higher rate tax on some of it. So it is worth working out your tax position before taking out some or all of your pension fund. In fact, you may even want to delay taking chunks of your pension until you stop working so as to pay as little tax as possible. We can help you with your pension planning.

GETTING YOUR PENSION MONEY NEXT YEAR – OR NOW!

We are reading now about how next year will see the doors to your pension savings open up  completely for those aged 55 and over. Many people, however, will not even have to wait that long. Anyone already aged 55 or over can already access his tax free cash immediately

(and either use the remaining money to buy an annuity or leave it invested).

If you are fortunate enough to have a guaranteed pension income of £12,000 or more (from your State Pension or other pensions), you can access all of your pension fund now and do not have to wait until next year. Whether you should do so or not is another question!

And if you are aged 60 or over, and your total pension savings are less than £30,000, you

can take it all as cash immediately (25% of the fund tax-free and the rest taxed as if you had

earned it in that tax year). Those aged 60 or over with small pension pots (with less than a
value of £10,000) can cash in up to three of these on the same basis.

DECISIONS, DECISIONS, DECISIONS!

There are many new decisions to be made with your financial planning.

There are the latest changes in pensions and how they affect you and your planning. There is the

expected rise in interest rates and the need to decide whether to keep your existing deal

or go for a fixed rate. And those with savings still face the challenge of how to keep their

money relatively safe but still make a reasonable return from investing it.

Contact us for more information.

Interest Rates to Go Up & Mortgage Costs to Increase

There is no real question about whether interest rates will start rising in 2015, only when.



It is worth looking at your mortgage options now. The average Standard Variable Rate currently is 4.4%. Medium term fixed rates have already moved up a bit but there are still bargains to be had. We are recommending interest rates fixed for 3 years or longer.



We are happy to provide information about your options without obligation and in many cases the lenders pay all, or most of the costs for new clients. We have considerable expertise and experience to help you find a deal that saves you money and best suits your circumstances. Just give us a try. Contact us on 01342-313302 or at info@sovereignfinance.org .