Pensions. All change!

The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.


As most people will have seen from press, TV and radio reports, from April 6, savers over the age of 55 with pensions will be given more control over how they choose to manage and spend their retirement pots.

Key changes include removing the requirement to buy an annuity – an income for life.   It means people draw money out as and when they wish along the lines of a bank account.  They also have the right to pass on what’s left invested of these life savings to their family when they die – without paying a 55 per cent death tax.

The new measures are for people in “defined contribution plans” – pensions that grow depending on the contributions made and the performance of the underlying investments.

Savers who decide to take money out of their pot an invest it elsewhere will have big decisions to make, including making sure their pots will last.

To help savers, the Government has launched the free Pension Wise service which is offered online, over the phone or face to face by Citizens Advice Bureau.  It’s important to note that Pension Wise cannot advise on what action to take, it can only provide guidance.  Pension savers who want advice may want to consider consulting an independent financial adviser.

The changes to pensions which the Government announced in last year’s Budget Statement have generally been well received.  But there are concerns too.  Pension savers need to take care about the freedoms that are available to them and take time over the decisions they make.

For instance, the new freedoms allow savers to cash in their whole pension pot if they want – but that could land them with an unexpectedly large tax bill.

There is widespread concern too that fraudsters and scammers will try to persuade people to switch pots to risky schemes, charging them huge fees and landing them with hefty tax penalties.  There is a real need for people to remain very vigilant to such fraud:  if a scheme such as overseas property development sounds too-good-to-be-true, it might well be so speak to a financial adviser first.

At Scottish Friendly, we are also very concerned about the high number of people who will be tempted to use their pension pots to enter the buy-to-let market.  Some of the press coverage Scottish Friendly has had on this subject is in the links below.

It’s all change for pensions but if you want to make the most from the new freedoms, do take the time to consider your options carefully.

Scottish Friendly’s press coverage on buy-to-let concerns

No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting Advisers may charge for providing such advice and should confirm any cost beforehand.