April 2015 Pension Reform – the facts
 
“Pensioners will have greater flexibility in choosing what to do with their retirement savings”
 
  • For many years, most policyholders have been required to use their retirement savings to buy a pension, often referred to as an annuity. You no longer have to buy an annuity. If you are over 55, you are able to take all your savings as cash. In most cases, 25% will be tax free and the remainder taxed at your marginal rate.
  • The 55% tax that applies to some pension fund death payments has been abolished -
    • If you die under age 75, your retirement savings (whether in drawdown or untouched) can now be passed on to someone free of income tax.
    • If you die after reaching age 75, your retirement savings (whether in drawdown or untouched) can now be passed on to someone. They can draw income from those savings (if the provider offers this option) paying tax at their marginal rate, or take them as a lump sum with a tax charge at their marginal rate.
*Click here for details of what death benefits you may be entitled to under your policy.
  • If you have a joint life annuity or one with a guaranteed payment period, and you die before age 75, the income will now be paid tax free to your beneficiary.
  • You are now able to select any beneficiary to receive the income from your joint life annuity on your death (please note that you cannot alter an existing annuity)