Pension Rules
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The UK has changed its pension rules so that people can take 25% of their pension fund as tax-free cash. The government has also merged eight tax regimes into a single streamlined system in order to offer greater choice and flexibility to investors. The government has also increased its pension contribution limits.[br]
Changes in Pension Rules
The most significant change in the new UK pension rules is the increase in the contribution limits. Before the new pension rules were enforced, the contribution depended upon the type of pension. The contribution limit for personal pension used to be 40% of income, and for persons with occupational pension schemes, it was 25% of income.
According to the new pension rules, there are two factors that contribute to the contribution limits, annual allowance and lifetime allowance. Under the new rules, one can invest up to 100% of their income with a maximum limit of £225,000, while the life time allowance is £1.6 million. The new pension rules allow a person to boost his or her pension pot.
Another advantage is that you can transfer the value of the share-save incentives offered by your employer into a pension scheme and enjoy tax relief. Although some providers may not allow a transfer, people with stakeholder or personal pension schemes can opt for a transfer.[br]
New Pension Rules: Tax Free Cash
According to the new pension rules, the shift to a life of retirement will be a smooth transition. Some people tend to withdraw the pension fund to invest in other investment vehicles. It is a good option to retain your pension fund if it is invested in a balanced portfolio that consists of fixed interest, equities, property and cash. Also, it is better not to withdraw your entire pension fund. Just withdraw the amount you require to meet your objectives. If you are interested in reducing your working hours, just determine how much you receive and take a decision accordingly.
Under the new pension rules, you need not to leave your job to draw pension if you have a company pension. The new pension rules offer a lot of flexibility. You may consult a financial advisor to make the right decision that will work best for you.
