This could be you if you are over 55 and have taken benefits from any of your pension plans
If you are over age 55, accessing money from one or more of your pension plans looks to be dead easy on the face of it. The problem is that if you take more than the 25% tax-free lump sum, the amount that you and your employer can contribute in future to a pension plan and get tax relief on immediately falls from £40,000 per annum to £4,000 per annum.
You could be blissfully unaware that you have fallen into this trap and be heading for a nasty tax shock.
Many people dipping into pension plans for very sound reasons fully expect to make contributions for years to come. Let’s be clear it’s not just the super-rich who could be caught by this. Perhaps the self-employed who have a good year and have some pension catching up to do; an employee earning just £30,000 with a good employer pension plan; or anyone trying to use pension plans as part of their overall tax planning strategy.
If you have taken any money from any of your pension plans please, please take this seriously and look into whether you have been affected. Unfortunately HMRC do not accept “ignorance” as a valid reason for not paying the correct tax and the penalties for getting it wrong can be very nasty.
On a wider front, this is a good example of why everyone should review their pension planning when they get to age 55 and are eligible to make withdrawals. There are some amazing planning opportunities out there but you do need to know what you are doing and get it right. If you would like some general guidance without going to the expense of getting a full pension review from a regulated pension specialist just email or text me, Richard on 07770 575122 and I will be in touch.
If you are over age 55 with old pension plans they could be the most effective way of getting hold of some cash but do make sure you understand all the pitfalls before you rush into action.
This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122