It seems that a number of retirees are cashing in their pension pots but the amount they are withdrawing has fallen. Savers can now cash their pension pots at the age of 55.
Pension pots have fallen to about £10,000, where as last year this number was significantly higher being an average of £20,000. This is clear evidence that retirees are using the pension reforms to cash in smaller pension pots or taking part of their savings and leaving the rest in schemes.
- Retirees have access free guidance from the government’s Pension Wise service.
- People with DB schemes can change to DC plans.
- The tax changes have made it easier for pension savings to now be passed on to descendants.
- People aged 55 and over and take out any amount from a DC plan (Defined Contribution)
From April 2015 people over the age of 55 have been able to cash in their pension pot, this is of course if they haven’t already bought a retirement income. Meaning that no tax will be paid on the first 25%.Since this came into play over £7 billion has been withdrawn and HM Revenue and Customs show that 158,000 people accessed £1.4 billion from heir pension pots over the last three months.
For more advice or help on this call our Manchester offices to speak to a member of our team on 0800 020 9542 or email hello@JacRox.co.