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UK government to allow new lump sum pension withdrawal
| Published: | 7 Aug at 6 PM |
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Tagged: Pension Transfer
As a result of a government think-tank analysis of the new pension rules, the Treasury has announced new proposal making it easier to access lump sums.
Yesterday’s publication of the draft Taxation of Pensions Bill contains a proposal that pension schemes be allowed to pay ad hoc lumps sums on the request of the holder of a pension pot. Known as an ‘uncrystallised funds pension lump sum’, the amount will be taken on a 25 per cent tax-free and 75 per cent tax liable basis.
Importantly, pension savers will not now be forced to buy an annuity or establish a drawdown vehicle within six months of taking the lump sum. According to HMRC, it will no longer be necessary for savers to first designate funds for drawdown, and the remaider of the amount after the 25 per cent tax free will be charged as pensionable income.
According to pension experts, the scheme is being regarded as a half-way house between a full drawdown facility and previous rules, and should make life easier for a number of schemes. Advisors and pension savers alike will need to be up to date on the new lump sum withdrawal scheme by 15 April 2015.
Yesterday’s publication of the draft Taxation of Pensions Bill contains a proposal that pension schemes be allowed to pay ad hoc lumps sums on the request of the holder of a pension pot. Known as an ‘uncrystallised funds pension lump sum’, the amount will be taken on a 25 per cent tax-free and 75 per cent tax liable basis.
Importantly, pension savers will not now be forced to buy an annuity or establish a drawdown vehicle within six months of taking the lump sum. According to HMRC, it will no longer be necessary for savers to first designate funds for drawdown, and the remaider of the amount after the 25 per cent tax free will be charged as pensionable income.
According to pension experts, the scheme is being regarded as a half-way house between a full drawdown facility and previous rules, and should make life easier for a number of schemes. Advisors and pension savers alike will need to be up to date on the new lump sum withdrawal scheme by 15 April 2015.
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