Weds 21st August 2024
Believe it or not, after a government “Pension Simplification” push in 2012 pension terminology used to be even more opaque and confusing. Many people today still continue to find the topic challenging to understand, which leaves them wide open to unscrupulous advisers who are more focused on their commission than the client’s best interest. In this morning’s presentation, Martin Tickner of Financial Choices outlined the most important terminology to better inform the group.
Some of the highlights were:
- The major types of pension (Defined Benefits and Defined Contribution)
- Accumulation vs Decumulation
- Tax Relief at Source (and the impact on basic vs higher rate tax payers)
- Annual Allowance – did you know the maximum contribution per year is £60K or 100% of your income, whichever is the smallest?
- Money Purchase Annual Allowance – where the annual allowance is reduced to £10K once you take a taxable withdrawal from your pension portfolio.
- Pension Commencement Lump Sum – Typically 25% of your pension pot that you can take tax free.
- Guaranteed Annuity Rate – this is often ignored by unscrupulous advisors, but some pensions have very high GARs that you lose if you transfer your fund to another pension.
There was something new to learn for everyone in the group. If you have any concerns or questions about your pension then you can call Martin on 01580 766400.
