Pensions stuff

[Aridane]

Hi

Looking for some signposting really.

I've never really bothered that much about pensions. Yes, there is an occuptation pension scheme at work (not final salary!), and I pay in contributions which are matched by my employer.

But I've always been a bit put off by the whole pensions thing in that it seems a bit of a gamble - ie if you put lots of money into your pension (as invariably seems to be the advice), you run the risk that if you die before your expected life span, you lose the funds. (I don't have a spouse / dependant, so the survivor's pension wouldn't apply). And I like the idea of being able to spend my money on retirement (or before...) as I see fit.

Anyhow, when the Budget reforms came out - ie you can withdraw some or all of your pension funds aged 55+, no need to purchase an annuity - I thought, great, now is finally the time to put additional money in my pension (and also get to get the tax benefits). However, I understand that if you take out more than 25% of your pension pot, you get taxed on these amounts at 45% - meaning you lose nearly half of the money withdrawn!

I'm getting horribly confused - and no idea really if what I've outlined above is correct factually.

Can anyone recommend any guides on pensions that might be able to help me here? I haven't found Martin's money website paritcularly helpful here. I appreciate I can always see an IFA - but would prefer, at least in the first instance, to do a bit of self-education.

Thanks!

very good idea - and start with a trip to the library for an up to date book or two. Which usually have one - again, make sure it is up to date.

I'm not sure I totally understand the current position, although not having to buy an annuity immediately you hit 68 is good news.

yes, it is a gamble - you'll lose it all when you die, but there are no pockets on a shroud anyway.

no right answers, just possibilities.

Assuming you're talking about a money purchase scheme you don't lose your accumulated pension fund if you die. Once you've bought an annuity with the pension fund that changes but before that point, it's really just a lump sum waiting to be assigned.

What you're really talking about is 'retirement planning' in a broad sense and that's the thing to discuss with an IFA. When do you want to retire (or semi-retire) and what are your expectations of your lifestyle when you do? Pension funds have the advantage of attracting tax relief and your employer (if you're lucky) makes contributions. But they also tie up money until a particular age, all your eggs are in one basket & there are other ways to make provision for the future and spread the risk. Tax-free savings, bonds/investments, property.

I like the This Is Money site for financial information.

Cogito - thanks. Website link is v helpful! Enough detail but still understandable.

Pension Advisory Service website is good also Money Advice Service one
Very shortly there will be Pension Guides employed to give free impartial guides to the new reforms
I think you can arrange an appointment through Citizens Advice

Hey there :)

I might be able to help -- I work for a property investment company in Sussex, we do a lot with pensions - I have pasted a link to my companies blog - we have recently put up on our website a breakdown of the new pension rules/changes (in the simplest form possible!) - You might find it useful!

Claudia x

www.davenport-wealth.com/changes-to-pensions/