26 January 2016

Are you able to take full advantage of the new pension rules?

Yesterday’s article in the Press & Journal from Richard Wadsworth, Chartered Financial Planner at Carbon Financial Partners, highlights the need to investigate whether or not your current pension arrangements allow you to take full advantage of the opportunities created by the new pension rules.

The main death benefit changes enable those who die before they reach their 75th birthday to pass the remainder of their pension on tax-free. For those who are older, the remaining funds are taxable. However, in this case the headline rate payable on death has been reduced from 55% to 45%. Importantly, Richard’s article outlines certain ways of reducing the liability even further. The change now allows you to pass your fund into the pension of a beneficiary, rather than it being paid out in cash. As Richard points out, this can potentially save thousands of pounds in tax.

However, not everyone can take advantage of the new rules. For example, the new options do not apply to final salary-style pensions, although it is possible to convert such plans so that you can take advantage. Also, anyone with a defined contribution (DC) pension such as, personal, stakeholder, or self-invested pensions could potentially take advantage, but they need to check that their DC pension can facilitate the new rules. Richard points out that many pension companies’ systems were not designed to facilitate what the new rules allow.

Therefore, Richard offers some sound advice about conducting a pension audit to make sure you can take full advantage of the benefits introduced by the new rules. In fact, Richard advises regular reviews of your pensions and investments to ensure you are taking advantage of potentially lower costs and greater flexibility.

You can read Richard’s full article here.

If you would like to discuss your financial planning options, please contact us with any questions you might have. You can do this by calling our head office on 0131 220 0000, or by emailing us at or you can also follow us on Facebook, Twitter or LinkedIn.

You can view Richard Wadsworth’s profile here.

Richard P&J 25 1 16

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