Pension changes 2015 – what you need to know

Lund Bennett Family Law - Cheshire and Manchester

Pension changes are just around the corner. Under previous rules, most people retiring have often bought an annuity, which provides an income for life. However, from the start of the new tax year on 6th April 2015 those aged 55 or over will be able to access the entirety of their pension pots.

A summary of the changes are as follows:

  • People aged 55 and over can withdraw any amount from a Defined Contribution scheme subject to income tax
  • Tax changes make it easier to pass pension savings on to family members
  • Many people with Defined Benefit schemes will be allowed to transfer to Defined Contribution plans

Existing annuity holders are unaffected for the time being however it is thought that there are plans for them to be able to sell their annuity. Considering these changes it seems that there will be a greater deal of flexibility with pension dealings as there are more options available; however it is important that people take time to consider how they use these options in a way which will work for them. For example, any lump sum of cash withdrawn from a pension will be treated as income and will therefore have income tax implications. It is vital to consult a financial expert or consult the free guidance which is being offered from the government’s Pension Wise service online.

A pension in divorce and separation is very significant. After the value of the former matrimonial home, pension provision of one or both spouses may be the largest capital asset of the marriage. The court has the power to take pensions into account in dividing up the matrimonial assets and there are a variety of different methods to ‘compensate’ a former partner for their lack of pension entitlement. It is therefore important to be aware of the changes to pensions and the implications of these changes in your current situation.

For advice on your rights on pension settlement in divorce proceedings contact our specialist Family Law lawyers now on 0161 927 3118 for a free 20 minute consultation.