FREEDOMS AND REPONSIBILITIES

The new pension legislation provides the freedom to access your pension savings from age 55.

However, first you have to have saved up some pension savings to have access to (!) and secondly you need to exercise responsibility and judgement as to how you apply these freedoms to your own personal situation.

If you are approaching age 55 and have pensions and are looking to work how to use them, here are six useful steps to take:

1. Check what the value of each of your pension pots is;

2. Gather information and speak to experts so that you understand your options. Ensure you understand the risks involved and establish your own attitude towards investment risks; (Note: there are some pension funds that come with guarantees.)

3. Work out how long the money needs to last. Even if it is not the most pleasant of subjects, it does mean you need to give some thought to your life expectancy;

4. Work out what your expenses will be in retirement;

5. Understand the tax implications of taking income or lump sums out of your pension;

6. Shop around for the best deals or take on a professional adviser who can do this for you.

The Government has established free sources of guidance to help you with the above. The help

can be on-line (www. pensionwise.gov.uk), face-to-face at a Citizens Advice Bureau, or over the phone, The Pensions Advisory Service. Once you have had “guidance” you may wish to have “advice” and that is where we would come in. We can provide impartial advice based on our extensive expertise and knowledge of the subject.

LESS PROTECTION

Cash held in banks and Building Societies have been protected by the Government through the FSCS (Financial Services Compensation Scheme) for up to £85,000 for each banking group.

From the end of the year, however, the level of this protection will be reduced to £75,000. This is a reflection of the increase in the value of the pound against the euro. The underlying European legislation stipulates protection in euros - 100,000 euros. There is a five yearly review. In 2010 the value of 100,000 euros was £85,000. When the review was done earlier this year, 100,000 euros were determined to be worth £75,000, hence the need for the change. If you have arranged your finances based on the £85,000 rule, you will need to review your deposits and bring them down to the new £75,000 level which is the maximum protection in case the banking institution

the money is with goes under.

PERSONAL SAVING ALLOWANCE

From April 2016 the Government is introducing a Personal Savings Allowance which will exempt

the first £1,000 of savings income from tax for basic rate taxpayers and the first £500 for higher

rate taxpayers. This is in addition to the other allowances. From that same date there will no

longer be the automatic deduction of 20% income tax by banks and building societies on non-ISA

savings. From April 2016 there is also a new £5,000 dividend allowance for those who receive

dividend income.