Six out of ten ageing Brits are unaware of the changes affecting theirt pension funds as a result of A-Day on 6 April next year, new research indicates.
50Connect, an Online lifestyle portal serving over 45’s, has revealed similar findings to research released late last week concerning the lack of A-Day awareness among British small to medium sized firms (SMEs).
50Connect says there is a general lack of understanding regarding new tax rules attached to pensions legislation offering more tax relief and flexibility, as well as those placing a cap on the amount of tax free cash that can be withheld.
Dale Lovell, money editor at 50Connect.co.uk, says it is no surprise so many individuals have no idea what affect A-Day might have on them.
He says: “The new changes could come as a big surprise to many saving for retirement because where considerable pension benefits have already been built up, A-Day legislation could lead to tax charges as high as 55p in every £1.”
This means any amount exceeding £1.5m will incur a lifetime allowance charge of 55% tax, he adds.
Lovell warns while £1.5m might sound like a large amount of cash the lifetime limit does take into account all types of pension savings over a person’s lifetime including private, occupational or voluntary contribution pension schemes.
Moreover, Lovell adds: “Following A-Day people will be able to take up to a quarter of their pension fund as a tax-free lump sum, allowing for greater flexibility and reinvestment opportunities.”
50Connect has created a new portal on its site providing advice and information on A-Day.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Gareth Vorster on 020 7968 4554 or email [email protected].IFAonline
'Integral part' of the financial planning process for many advisers
Proposals outlined at Labour Party conference
Finance industry working to stop fraud
Partner Insight: Cathi Harrison, director of para-sols and Apricity and Clare Farrell managing director at Northfield Wealth met in London recently to discuss how to stay on top of regulatory risk.
CEO labels whistle-blower as 'brave'