This analysis focuses on when benefits can be taken, summarises the main options available and also looks at the restrictions that apply.
We look at reaching age 75 in the latest in our series of top five FAQs on pensions technical topics.
One of the most popular options is income drawdown. There are two types: capped and flexi-access drawdown.
Since 6 April 2015 any new drawdown plans must be a flexi-access drawdown plan.
New capped drawdown plans were only available until 6 April 2015. Existing plans can continue as long as the GAD limit is not exceeded.
CPD | Income drawdown – Here we look at the market trends since pension freedoms began in 2015, including changes in withdrawal patterns and the consideration of changes in the demographics of UK society. Craig also talks about the retirement outcomes review (ROR), how this has changed at retirement advice and much more including best practice in FAD file construction how to review income drawdown plans in a compliant and cost effective manner. Recorded on 27 February 2020.
Sometimes it's possible to exchange all pension benefits for a one-off lump sum.
An explanation of when emergency rate tax applies and how to get it back.
There is a maximum amount that can be taken from a pension scheme without being subject to a tax charge. This is called the lifetime allowance and fittingly the tax charge is called the lifetime allowance charge.
It is currently possible to protect benefits from a lifetime allowance charge as a result of the lifetime allowance being reduced. This protection has the effect of locking the lifetime allowance at a certain rate, meaning the reduction won't apply. However, there are conditions which, if broken, will result in protection being lost.
CPD | Opening the door to lifetime allowance and relevant life – In this webinar we look at the features and benefits of a relevant life plan, and how it could be an efficient form of life cover for those clients who may have a lifetime allowance issue
Once benefits have been taken, it is possible to re-use this money and pay it back into a pension. However, you won't be surprised to hear that there are rules and restrictions in place.