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Changes to Pension Benefits

Thu 3 Dec 2009



Did you know that if you are aged 50 now, or older, you could be enjoying part of your pension benefits already?

However, beware that this benefit is about to change as recent pensions legislation is increasing the earliest age from which someone can start taking benefits from their pension scheme, from age 50 to age 55.

This increase could give rise to some financial difficulties especially for anyone who has made any plans based upon receiving benefits, particularly any Tax-Free Cash, within the next few years. For example it may be that you are looking to use the Tax-Free cash from your pension to pay off or reduce your mortgage, or use the monies to fund for children's further education or accommodation etc.

For example, if you are 53 when the changes take effect from 6th April 2010, you would need to have either already started to draw your benefits, or wait another 2 years until your 55th birthday!

Are you affected?

If you were born on or after 6th April 1960 you will no longer be able to start taking any benefits before age 55.

If you were born before 6th April 1960, you'll be able to start drawing pension benefits prior to age 55, provided the arrangement is started prior to 6th April 2010.

Can I take my pension and continue working?

Yes, in many circumstances, you can take your pension and continue in your chosen occupation.

Can I take the pension funds I have built-up so far, and continue contributing to another pension scheme?

Yes in many cases this is possible.

Other Factors:

How will my projected retirement fund be affected by using the funds early?

What are the risks involved?

Will my plan be affected by charges if I vest early?

Some plans are invested in "Life-style" funds, how will they be affected?  

Will this change affect any life assurance cover you have under your pension plans? 
Where can you get more information?

Getting detailed, independent pensions advice has never been more important.

Graham Lear is just one of the qualified Financial Advisers at Loughtons Independent Financial Advisers of Bovey Tracey (opposite the Town Hall). Tel 01626 833225 or visit www.loughtons.co.uk     


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