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Over-55s given freedom to make call on cash savings

By Vicky Shaw

Published 07/04/2015

More than half a million older savers have been handed radical new freedoms as the start of a new "21st century pensions system" gets under way.

People aged 55 and over are being handed new powers to make one of the most important decisions of their lives - what to do with retirement savings that they have spent decades building up.

Older savers will no longer be required to use their pension pot to buy an annuity when they come to retire. Instead, they can access their pots how they wish, subject to their marginal rate of income tax. They could take their pot in one go, or use it like a bank account and withdraw cash in slices.

The new freedoms will apply to the 320,000 people who retire each year with a defined contribution (DC) pension. Around 540,000 people will be able to take control of their savings from today, according to estimates from the Government. The reforms were unveiled in last year's Budget, so many people have been delaying their pension decisions until now.

Property investing, holidays, using the money to help family members and reinvesting the money with financial firms are some of the ways that people could use their cash.

But experts said that for many people, the best option will be to resist making an immediate dash for their cash. They urged people to take time to carefully weigh up their options.

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