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Key Changes in the Pensions Reform

From April 2015, pensions in the UK have undergone the biggest reform in decades.


Here are the key points of the big changes to your pension:

1.Pension Freedom

Savers over the age of 55 are able to access their private pension pot freely, withdrawing as much or as little as they choose – but at a price.

You can still take 25% of your pot tax-free either as a lump sum or in smaller instalments. However, any amount you choose to withdraw over this 25% will be subject to income tax and could mean you will be taxed at the higher rate of 40%, or even at the additional rate of 45%.

If you’re tempted to take a big lump sum you could be heavily taxed, so we do recommend that you seek specialist advice. You can find out more about the Government’s tax thresholds and personal allowances on their website.

2.Changes to State Pension

From April 2016, the State Pension has been switched to a new, flat-rate system to around £150 a week.

However, Government figures estimate that only 45% of new pensioners will be entitled to the full amount. Read more.

3.Pension Caps for the Wealthy

If you are lucky enough to have a huge pension pot, the bad new is that, from April 2016, the amount you can have in your pot has reduced from £1.25m to £1m.  Whilst most people aren’t affected by this Lifetime Allowance, those who are should take action immediately.

4.Easier to Pass on Your Pension

Under the new rules, passing on your pension pot after your death becomes more of an option and much more tax-friendly.  Under the new pension freedoms, you can now leave a legacy for your family.

5.What’s the Best Option for You?

Planning your retirement used to be pretty straight-forward – save into a pension pot, purchase an annuity, and then live off the steady income for the rest of your life.

While you can still do that, the new changes unlock a whole new realm of possibilities for acquiring an income through your retirement.

But which option is best for you?

Every saver is different, and it’s important to get advice which is personal to your own needs to maintain and boost your own income in retirement.

If you want to find out what your options are ahead of retirement, book a free appointment with our Pension Experts today, and make sure you make the right choice with your pension.  Call us on 0161 443 4555, or

Click Here to Book Your FREE Pension Review