Pension Support

Your pensions guide Explore a world of options now available to you.

Start your pension review - Simply complete our Pension Review Information Form

Which option is right for me?

With lots of options available to you, we have broken things down into an easy to understand diagram below. To explore each of the options in more detail, please continue to read the relevant sections within this guide. Alternatively you can complete our Pensions Review Information Form and one of our experienced pensions advisors will contact you with the best options available.

Tax Free

Regular Income

Guaranteed Income

Flexible Income

Keep Ownership

Without taking an income Take it all in one go

25% of it is

Take the 25% tax free cash

Freedom and choice in pensions The 6 April 2015 Budget saw the most radical changes to private pensions for a generation. The political spin is it was for ‘freedom and choice in pensions’. This sounds like an unmitigated plus. Indeed there are many more options, and for those who know what they’re doing it’s great, but it also means it’s easier to make a mistake.

In April 2015, the tax rules were changed to give people greater access to their pensions. Drawdown of pension income is taxed at marginal income tax rates rather than the previous rate of 55% for full withdrawals. The tax-free lump sum continues to be available. There are six options available including, leaving the pension pot untouched, purchasing an annuity, getting an adjustable income (Flexi-Access Drawdown), taking cash in chunks (Uncrystallised Funds Pension Lump Sum), cashing in the whole pot in one go and mixing any of the options.

Take lump sums (UFPLS)

Depends*

Depends*

25% of each withdrawal

Depends*

Depends*

Annually

Without taking an income Flexi-access drawdown

Up to 25% as a lump sum

Annuity

Up to 25% as a lump sum

Guaranteed Drawdown

Up to 25% as a lump sum

**

* It depends what you decide to do in the future. ** This is flexible, although if you vary your income your guaranteed income will need to be recalculated.

Start your pension review - Simply complete our Pension Review Information Form

What are my options?

In this guide we give you an overview to keep things simple to understand and easy to digest. As you know there are a lot of technicalities and various options to consider with each. We want to ensure you have a better understanding of all the options available. Some may work better than others depending on what you would like to do with your new freedom and choices pension.

Here at Pension Support our aim is to help you make the right decisions, we want to maximise what you can get out of your pension so it works best for you. We are happy to talk you through any of these options in as much or as little detail as you like. To start the process simply complete the Pensions Review Information Form.

Take it all in one go You can take your whole pension pot as cash. You take your whole pot in one go.

25% is tax free, the other 75% is taxed.

You pay tax when you take money from your pot. This is because when you’re paying into your pension you get tax relief on your contributions.

Your pension provider will take off the tax you owe before they pay you the cash.

The cash you take will be added to any other income you have over the tax year, eg money from work, savings and benefits.

You may pay emergency tax when you take money from your pot which you can claim back. If your provider doesn’t pay your emergency tax back automatically, you can claim it back from HM Revenue and Customs.

Taking the 25% tax free cash

Your pension is now in your hands. You have the freedom and choice to do what you want to do.

Make the most of this exciting opportunity.

Take 25% tax-free, then buy a flexible income drawdown product. This is a product you buy that keeps the rest invested so it can still hopefully grow, but you can also use it to take income when needed.

The tax here is different, you get the first 25% you withdraw tax-free and then the rest is taxed when you take it – which could be useful if you’re likely to be in a lower-tax bracket once you’re older.

Taking a lump sum You can take smaller sums of cash from your pension pot until it runs out. How much you take and when you take it is up to you.

Each time you take a chunk of money 25% is tax free and the rest is taxable.

Some pension providers charge a fee to take cash out.

You decide how much to take and when to take it. Your 25% tax-free amount isn’t paid in one lump sum – you get it over time.

Not all providers offer this option. If your current provider doesn’t offer it, you can transfer your pot to another provider but you might have to pay a fee.

Start your pension review - Simply complete our Pension Review Information Form

Taking a regular income A lot of the headlines that make the media revolve around taking out a lump some or cashing in on your pension. Although this sounds exciting and may be the right option for some people, this may not be on your agenda. There is another option available, and this is to take a regular income. Pensions have always been a way to provide an income to support your lifestyle for when you retire, so a regular income will enable this. This guide will help you look through the options - for more advice please complete our Pension Review Information Form and a qualified advisor will contact you to discuss the best option available to you.

Annuities You can use your pension pot to buy an insurance policy that gives you a guaranteed income for the rest of your life. This is called an annuity.

You get a fixed income for life or for a set number of years. You can take 25% of your pot as tax-free cash and buy an annuity with the other 75%. You pay tax on your annuity income.

If you’re currently receiving a pension income it’s likely that you’ve already bought an annuity or are taking an income from a final salary or career average (defined benefit) pension.

Please complete the attached pension review for and we can give you advise on the annuity options available to you.

Guaranteed drawdown Guaranteed Drawdown is very often considered a halfway house between the constrained security of a Conventional Annuity and the risky flexibility of Flexi Access Drawdown. It will give you the security of a guaranteed income for life (like an Annuity) but still give you maximum flexibility and control of your capital (like Drawdown).

There are variations, dependent upon which pension product you chose. For example; you may elect to fund your guaranteed income by using a part of your fund for Annuity purchase at outset. Or more likely the pension product provider will underwrite your income guarantee by engaging a Counterparty and purchasing derivatives to offset any falls in your fund value.

Flexi-access drawdown You can take up to 25% tax free cash from your pot and the remaining 75% needs to be invested so that it generates an income for you. It is important that you get help on how much you can take out to make the fund last as long as possible. The income you get from what’s in your flexi-access fund is taxable. It’s added to any other income you might have for the year if and how much tax you pay depends on your overall income for the year. If you take a lot of income it could mean that you get bumped into a higher tax rate.

If you don’t have a P45, it’s possible that you’ll be put on an emergency tax code until HMRC issues a new tax code to your provider. At the end of the tax year HMRC will check you’ve paid the right amount of tax.

If you owe tax or have underpaid, they’ll send you a tax calculation and a new tax code to your provider.

They’ll use this to work out how much tax to take from your pension payments for that tax year. However, if you have overpaid tax you do not need to wait until the end of the tax year to reclaim the overpayment. If you still want to pay into a defined contribution pension fund, you only get tax relief on £4,000 a year.

Start your pension review - Simply complete our Pension Review Information Form

Next steps - Get Your Free Review In this guide we have touched on the options available to you. We firmly believe you should have the freedom and choice in what to do with your pension. Our advisors can help with this, simply follow the steps below and let’s make the most of your pension.

Step 1 Complete our “Pension Review Information Form” and kindly post it back to us using the pre-paid envelope provided.

Step 2 On receipt of your form, our dedicated team will contact your Pension provider on your behalf to get the latest up to date value and an understanding of how your Pension is performing and that it will meet your retirement needs.

Step 3 We will send you a full review of your current Pension to help you get a better understanding of your options.

Remember our services is free of charge and we work on a complete non-obligation basis.

Start your pension review today Complete our Pension Review Information Form Telephone 0113 419 9943