-- Warning over Flexible Drawdown Contributions --
One year annuity deferral could take 24 years to recover
One year annuity deferral could take 24 years to recover
It's time to scrap pensions in favour of savings
It's time to scrap pensions in favour of savings
Pension Income reduced by Quantitative Easing
Pension Income reduced by Quantitative Easing
How to carry forward and Intervening tax years
How to carry forward and Intervening tax years
- One year annuity deferral could take 24 years to recover 2012.02.08 One year annuity deferral could take 24 years to recover
- It's time to scrap pensions in favour of savings 2012.02.08 It's time to scrap pensions in favour of savings
- Pension Income reduced by Quantitative Easing 2012.02.08 Pension Income reduced by Quantitative Easing
Credencis is warning retirees that they will be unable to access their pension through flexible drawdown in the 2011/12 tax year if they make a single contribution after April 5.
The reforms, announced last December, will allow investors to draw down 100 per cent of their savings above a minimum income requirement of £20,000. Anyone that makes contributions will be unable to draw money from their pot until the following tax year.
Credencis says: "The small print says that flexible drawdown cannot be taken in a tax year when contributions have been made and anyone hoping to use flexible drawdown in the next tax year needs to ensure all contributions cease on or before April 5 this year. A single contribution will mean waiting another year."
The Treasury has been praised for its simplified approach to the changes although providers have criticised the Government for pressing ahead with the April 2011 implementation deadline.
"Alth-ough flexible drawdown looks attractive, clients need to be aware of the detail. When people realise they will be paying income tax at the marginal rates on withdrawals, they probably will not take their pension all in one go."
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Views expressed by our author, are the personal views of the author alone, and are not intended in anyway to be construed as advice.They should only be used as guidance and are not necessarily suited to the personal circumstances of every individual in the UK.If you are interested in seeking advice further then please contact Credencis direct.
