Since April 2015, people aged 55 or over in defined contribution schemes have had greater flexibility over how they access their savings. The number of people taking flexible payments from their pension more than doubled in quarter two of 2016.

In the three months to June 2016, 159,000 people used pensions freedoms, compared to 74,000 in quarter one. So far there have been 772,000 payments totalling more than £6 billion.

 

There are numerous ways to take pension savings:

Lump sum payments

People can withdraw pension funds in multiple cash lump sums. The first 25% remains tax-free and the rest is taxed at your marginal rate. No tax will be charged if you withdraw less than the annual personal allowance.

Annuities

Using your savings to buy an annuity can guarantee you an income for the rest of your life. You can combine this with the 25% lump sum if you wish. You don't have to take the annuity rate offered by your pension scheme. It is worth investigating other providers to see if you can get a better deal.

Drawdown

The drawdown system has been simplified and renamed flexi-access drawdown. There are no longer any limits on how much you can take from your pension pot each year using drawdown.

You can withdraw up to 25% tax-free and keep the remainder of the pot invested. You choose where to invest and when to take income from it.

Get in touch

If you would like to discuss your own pension savings, give one of our advisers a call today on 01483 205890