Gordon Wilson was recently interviewed live on Radio Scotland with John Beattie and Agnes Stevenson about the new pensions freedoms, set to be introduced in April 2015.
From April 2015, if you are over 55 you will be able to withdraw all of your existing pension fund. Some recent surveys suggest as many as 12% of those eligible do intend to withdraw their entire pension fund; John Beattie asks Gordon the potential risks in this strategy and whether or not it is a sensible option. Also on the programme was Agnes Stevenson, a freelance journalist with a mixture of pension provisions.
Gordon was keen to point out that taking all of your entire pension may not me the best plan, especially since you could end up paying 40 or even 45% tax. He also stressed there is no need to rush into a decision because pension withdrawals can be made as and when you need the money. It is not an all or nothing choice, therefore you should plan what you need and be sure that you have enough money to last you during your retirement.
It’s worth listening to what Gordon had to say on the BBC iPlayer – you can link to it here; the pension discussion starts at 38:21 minutes into the programme and finishes at 52:58 minutes.
In summing up, Gordon’s advice was to ask first, why are you taking any money from your pension and will it be put to better use than it currently is in your pension fund? If you do decide to draw down, take professional advice about the tax that will be payable. Finally, he advises proper planning and to make sure you can be confident that you will never run out of money.
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