Investors face an ‘overwhelming’ series of changes to pension legislation and must take proper advice in order to make correct decisions, a pension specialist has warned.
The warning comes as the Government announces legislation that will mean over-55s will have added flexibility to ‘do what they want with their money.’ The news means that from next year, those approaching retirement and pensioners will be able to access the whole of their pension fund (subject to income tax), rather than just being restricted to a 25 per cent tax-free lump sum and annuity/drawdown. This is one of a number of changes announced by the Government. Recent weeks have also seen the Chancellor unveil plans to scrap the current 55 per cent tax charge on lump sum pension benefits left to family members – known as the Death Tax. The changes to the rules are set to come into force in April 2015.
Emma Thomas, senior consultant at Ludlow Wealth Management Group, which has an office in Preston, said: “Recent figures from Nest, the Government’s default pension scheme, show that since businesses have been obliged to place employees into pension schemes, an extra 4.5 million people are saving towards their retirement which is great news.
“However, there is a danger that much of this new attention will mean people are overwhelmed by the recent changes and may rush into making decisions without a full understanding them.