The majority of pensions now basically consist of a pot of money. The current rules allow a person aged 55 or older to take 25% of the value of this pot tax-free. The rest can be used to set up an income for life or to draw down lump sums when needed. Any of these remaining funds that are taken out or turned into income are taxable. They are treated the same way as any other earned income in the year they are taken.
While the majority of people we see have the relatively simple type of pension described above, there are some complications with older pensions where there are certain guaranteed benefits built into the plan. It is worth having such plans looked at by a professional to ensure you are not missing out.
There are also many people who still will be able to benefit from better pension schemes termed
“defined benefit or final salary pensions” as they guarantee an income based on years of service and salary. We are available for assistance with such matters. Just give us a ring.
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