There are 10 weeks left before George Osborne significantly changes our opportunities for retirement saving. Lynsey Sykes Davis, Wealth Manager at AAG, looks at what can, and more importantly should, be done right now to protect your pension funds.
On April 6th, the maximum you can save into a pension will drop from £1.25 million to £1 million. “Anything over and above £1 million will then be subject to 55% when you come to draw your pension.” It’s the third time the government has cut the limit, and essentially penalises the prudent.
“Whilst £1 million pounds might sound a lot, it’s quite possible that a 35 year old with a current pension pot of £40,000 could reach the limit of £1 million by the time they are 65. So, it’s a tax on the many not the few – and lots of the people will be unsuspecting.”
It’s concerning how many people simply don’t know the value of their pensions, let alone if final salary pensions are included in the calculation. “Understandably, people are confused about their pensions, the easy option is to bury your head in the sand. However, regardless of your age and pension pot size, now is actually the time to take action – before it’s too late!”
More and more clients coming to us because, having read the media coverage, they are confused about what they should be doing. Questions that keep cropping up include:
- How does the lifetime allowance tax actually work?
- How do I know if I’ll be affected by the lifetime allowance?
- Should I stop paying into my pension?
- Can I protect my pension pot?
“Of course there are generic answers to these questions, but actually it’s more valuable to look at the answers in respect of your personal circumstances. Your Wealth Manager can then provide you with the most appropriate advice, and continually review the advice as your personal circumstances change”
Lynsey summarises, “Quite simply, take action now, before it’s too late.”