Saturday, 14 March 2015

Saturday, 14 March 2015

Personal wealth warning for pension freedom

The new “pension freedom” regime will come into being on 6th April 2015.

This is potentially very welcome news for retired British people, but it comes with a large personal wealth warning, and a need for personal responsibility. You need to be fully informed on how all your options affect you personally before you take action. Remember your pension fund is exactly that – designed to fund your retirement, it was not designed to fund a house purchase, but take care otherwise you could get it very wrong.

If you have a defined contribution schemes, from April 2015 you can draw down (withdraw) as much of your pension funds as you like. From April 6, 2015, there will be no limits on how much money can be removed, but all withdrawals outside of the 25% tax-free cash will be treated as taxable income. You can take a series of lump sums from your pension funds without having to enter into a drawdown policy. However, you need to understand the French tax implications – and it can, in fact, provide interesting opportunities, so we have teamed up with a leading firm of International Financial Advisers to provide all Allez-Français clients with suitable advice.

The 55% pension ‘tax upon death’ will be abolished, including annuities.  This means that your beneficiaries can receive the balance of your fund tax free if you die under age 75, or pay income tax or 45% if the fund taken as a lump sum (for the year 2015-16) if you are over 75. This does not affect final salary pensions.

From April you can transfer a defined benefit scheme into a defined contribution scheme - but be aware that you could lose valuable benefits, so it may not be the best decision for you.

Deciding what to do with your funds now could be one of the most important financial decisions you ever undertake. Taking suitable professional advice from a professional and regulated adviser will give you peace of mind, whilst ensuring that all the complex rules are followed and suitable advice for you is offered.

For more information please contact Peter Elias for referral onwards –

This can involve an initial consultation by phone with our advisers.

It is essential to consider the tax implications in your country of residence to establish what would work best for you.

Be aware also that pension schemes offer sound UK inheritance tax protection, whereas once the cash is back in your estate it could be exposed to inheritance tax as well as local succession tax in Spain and France. However with expert advice you may be able to avoid or lower your liabilities.

This article can only cover the key points of the new legislation and only provide a summary. There are also other elements you may need to consider. Sound financial planning and personalised advice is crucial, particularly for those with larger funds. Do not make any decisions until you have all the information and understand all the implications.

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