The new ‘Pension Freedoms’ have certainly opened up opportunities for more flexible retirement planning, which previously we would not have even considered.
We have two cases this month using the new Pensions Freedoms, one involving a single man , about to retire, who has no dependants and is unlikely to marry; the other in a Civil Partnership where the spouse’s pension on death was restricted to a quarter of it rather than half, and both retirees were members of an Employers’ Defined Benefit scheme.
In both cases, by transferring to a Personal Pension, they were able to enhance the death benefits: our single client now being able to leave his entire residual pension to his nieces and nephews and our married one able to leave her partner all of her pension on death and not just a small part of it.
In addition, although Mr O was eligible for his benefits the other, Miss G, was not so this enabled her to take her benefits early as well. Had she taken them directly from the scheme, she would have had 40% less.
We were also able to defer any penalties they would incur being near or over the Lifetime Allowance (The maximum pension pot you can have before you start paying penalties on any benefits over this amount). In Mr O’s case by phasing his tax-free cash he could avoid tax on it for nearly 10 years. In Miss G’s case we are able to prevent this altogether by ensuring that she applies for “protection” on the amount. However, phasing for her also gives her greater flexibility.
These solutions are not for everyone and we have to work through a fairly complex process to ensure it is the right one for you. Contact us if you think we can enhance your pension benefits.