A few months ago the Chancellor announced the biggest shake-up to the pensions system in years, and it's changes to annuities that caught a lot of pre-retirees' eyes. It has the potential to completely transform the annuity landscape and gives those approaching retirement a lot more freedom when it comes to spending their pot, but just what do the changes mean? Well, we've broken it down for you.
As you can see, a lot's changed. The new rules offer welcome flexibility and give people more choice in how they can spend their pension pot, as under previous rules the majority of retirees – those that didn't have small pension pots and therefore couldn't opt for trivial commutation, and those that didn't have big enough pots or a large enough guaranteed income to consider drawdown – would have effectively been tied into an annuity, or face a tax charge of 55% for withdrawing more of their pot.
Of course, annuities could still be the right choice for you, as it all depends on your individual circumstances. There's a lot to think about, so getting the right advice will be key – the Government's additional promise of a guidance guarantee for those approaching retirement was another welcome announcement in this year's Budget, but in the meantime consult our annuity planner or contact an adviser to discuss your options.
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