If you are aged 55 or over, you may be able to start drawing pension benefits now from a personal pension, even if you are still working. Members of defined benefit schemes are likely to face more restrictions and charges if a pension is taken early. We at Hutt Professional have financial advisers who would be able to offer you independent financial advice on drawing pensions benefits from your personal pension and which ones will suit your individual circumstances better.

It may not even be necessary to start taking a full pension income immediately. For example, it may be possible if appropriate to just take your tax-free cash entitlement (entirely or in part) and designate funds for income drawdown. Once all your tax-free cash is taken, further drawings are liable to tax at your marginal rate and will trigger the money purchase annual allowance (MPAA), so a phased approach is likely to be most tax-efficient.

Alternatively, you can take an ‘uncrystallised funds pension lump sum’ (25% of which is tax-free with the rest taxed at your marginal rate) if appropriate – either the whole fund or a series of payments if the product allows – but this may not be the best option if you or an employer may make contributions to your pension fund at a later date. Most individuals with a defined contribution pension can also now take their whole pension fund via flexi-access drawdown (in one lump sum if appropriate). Funds taken this way above the usual 25% tax-free cash entitlement will be taxed at the individual’s marginal rate of tax for the year.

Anyone who is entitled to flexi-access drawdown and who is considering retiring overseas should seek professional financial advice on the potential tax savings of taking such income while outside the UK tax net.

Individuals in defined benefit (final salary schemes) may not have these flexible options and may want to consider switching out of their current scheme and into a personal pension to achieve this flexibility. However, depending on the terms of the particular defined benefit scheme concerned, the cost of such a switch could be prohibitive. Anyone considering this issue is required by law to prove that they have taken financial advice from an independent financial adviser before such a transfer can take place (if the transfer value is £30k or more).

If you would like to seek independent financial advice on pension drawdowns , we at Hutt Professional have financial advisers with many years of experience and who are also highly qualified who would be more than happy to offer you the independent financial advice you may need. If you are located in Leamington Spa or surrounding areas please do not hesitate to contact us.

Source:http://www.goldminemedia.co.uk/  12/04/2016