Pensions have been transformed by the arrival of freedom reforms on 6 April 2015 which now give much greater flexibility over what you can do with your pension pot.\u00a0The new freedoms mean you can enjoy far greater choice on how you spend and generate an income from your pensions, but with further changes on the horizon these are some of the key points you need to know.<\/p>\n
State Pension<\/strong> The new State Pension is designed to be simpler. But there are some complicated changeover arrangements which you need to know about if you\u2019ve already made contributions under the current system.<\/p>\n You\u2019ll be able to get the new State Pension if\u00a0you\u2019re eligible\u00a0and:<\/strong><\/p>\n A man born on or after 6 April 1951 If you reach State Pension age before 6 April 2016, you\u2019ll get the State Pension under the\u00a0current scheme\u00a0instead. How much you can receive<\/strong> You\u2019ll usually need ten qualifying years to get any new State Pension. The amount you receive can be higher or lower depending on your National Insurance record. It will only be higher if you have over a certain amount of Additional State Pension. You may have to\u00a0pay tax on your State Pension.<\/p>\n Working after State Pension age<\/strong> Defer your new State Pension<\/strong> What this means Your State Pension will be lower if you\u2019ve ever been contracted out of the Additional State Pension.<\/p>\n How this affects you depends on whether you reach\u00a0State Pension age:<\/strong><\/p>\n Before 6 April 2016 Changes to contracting out from 6 April 2016<\/strong> You\u2019ll no longer be contracted out *only applies to members of contracted-out defined benefit pension schemes<\/p>\n Basic and Additional State Pension<\/strong> The\u00a0basic State Pension The\u00a0basic State Pension isn\u2019t affected by being contracted out. However, your Additional State Pension will be reduced according to how long you were contracted out.<\/p>\n You have a workplace, personal or stakeholder pension<\/strong> Had some of your National Insurance contributions put towards your workplace, personal or stakeholder pension<\/p>\n Your\u00a0starting amount for the new State Pension\u00a0may include a deduction if you were contracted out in certain:<\/strong><\/p>\n Earnings-related pension schemes at work (for example, a final salary or career average pension) before 6 April 2016<\/p>\n Workplace, personal or stakeholder pensions before 6 April 2012<\/p>\n You may not receive the full\u00a0new State Pension\u00a0when you reach State Pension age if you were contracted out.<\/p>\n Lifetime allowance<\/strong> The lifetime allowance reduction means you need to plan carefully. After April 2016, anyone who breaks through the \u00a31 million threshold may be liable to 55% tax on any amount over the limit if the excess is taken as a lump sum. If any of the excess is instead taken as income, the tax charge is 25%, although the income itself will still be subject to Income Tax at the recipient\u2019s marginal rate.<\/p>\n Annual Allowance<\/strong> A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.<\/p>\n YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE<\/p>\n","protected":false},"excerpt":{"rendered":" The impact of further pension changes on the horizon from this April Pensions have been transformed by the arrival of freedom reforms on 6 April 2015 which now give much greater flexibility over what you can do with your pension pot.\u00a0The new freedoms mean you can enjoy far greater choice on how you spend and… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"_links":{"self":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/1573"}],"collection":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/comments?post=1573"}],"version-history":[{"count":0,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/posts\/1573\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/media?parent=1573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/categories?post=1573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vizionwealth.co.uk\/news\/wp-json\/wp\/v2\/tags?post=1573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThe new State Pension will be a regular payment from the Government that you can claim if you reach\u00a0State Pension age\u00a0on or after 6 April 2016. If you reach State Pension age on or after that date, you\u2019ll get the new State Pension under the new rules.<\/p>\n
\nA woman born on or after 6 April 1953<\/p>\n
\nYou can still get a State Pension if you have other income such as a\u00a0personal pension\u00a0or a\u00a0workplace pension.<\/p>\n
\nThe full new State Pension will be starting at \u00a3155.65 per week. Your\u00a0National Insurance record\u00a0is used to calculate your new State Pension.<\/p>\n
\nYou don\u2019t have to stop working when you reach State Pension age, but you\u2019ll no longer have to pay\u00a0National Insurance. You can also request\u00a0flexible working arrangements.<\/p>\n
\nYou don\u2019t have to claim the new State Pension as soon as you reach\u00a0State Pension age. Deferring the new State Pension means that you may get extra State Pension when you do claim it. The extra amount is paid with your State Pension (for example, every four weeks) and\u00a0may be taxable. After you claim, the extra amount you get because you deferred will usually increase each year.<\/p>\n
\nfor your pension<\/p>\n
\nOn or after 6 April 2016<\/p>\n
\nOn 6 April 2016, the contracting-out rules will change so that if you\u2019re currently contracted out*:<\/p>\n
\nYou\u2019ll pay more National Insurance (the\u00a0standard amount of National Insurance)<\/p>\n
\nIf you reach\u00a0State Pension age\u00a0before 6 April 2016, you can apply for both:<\/p>\n
\nThe\u00a0Additional State Pension<\/p>\n
\nIf you were contracted out of the Additional State Pension in the past through a workplace, personal or stakeholder pension, you either:
\nPaid lower National Insurance contributions<\/strong><\/p>\n
\nThe lifetime allowance will be cut from \u00a31.25 million to \u00a31 million from 6 April 2016 \u2013 the maximum amount people can build up in their pension pot during their lives. This is the third reduction in four years, leaving the allowance at less than half the level originally intended, when it was to be inflation-linked from 2011\/12 onwards.<\/p>\n
\nThe Annual Allowance is the amount you can pay into a pension fund each year and get tax relief. From 6 April 2016, the Annual Allowance will be tapered from \u00a340,000 for those with earnings of \u00a3150,000 or less down to \u00a310,000 for those with income of \u00a3210,000 or more.
\nFor this purpose, income isn\u2019t just comprised of someone\u2019s salary. It is \u2018adjusted\u2019 to ensure it includes personal and employer pension contributions or any other income including savings, bonuses or even an individual\u2019s buy-to-let property rental \u2013 taking many more people into a higher earnings bracket. The annual allowance will reduce by \u00a31 for each \u00a32 of adjusted income above \u00a3150,000 until it reaches \u00a310,000.
\nIf appropriate, some people if they act now could reduce their tax liability by carrying forward any leftover pension allowance from previous years or taking advantage of the transitional Pension Input Period (PIP) which will provide the opportunity of making a total payment of up to \u00a380,000 into their pension pot this year.<\/p>\n