Pensions and tax
To what extent have the pension freedoms brought in by the government been adopted by the public? With reporting in the initial phase being voluntary, statistics for the first four quarters since the scheme went live have been seen as indications only. However, Q2 of 2016 has seen the first set of compulsorily reported statistics and these have revealed that in that quarter alone 159,000 individuals withdrew a total of ￡1.77 billion from their pension pots.
At the same time the government has revealed that the free guidance service, Pension Wise, has had 2. 7 million visits, with nearly 75,000 appointments being carried out. Commenting on the statistics the Treasury’s economic secretary, Simon Kirby, said “Our pension reforms have already given hundreds of thousands of people access and responsibility over their hard-earned savings and we will continue to make sure that the pension freedoms work well for everyone.”
The fact that the scheme has proved so popular is a danger in itself. The rules in respect of pension fund withdrawals are complex, leaving individuals open to potential tax bills should they withdraw too much in any one financial year.
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8 年dropped you an email and text message if you could get in touch with me please
Co-founder and director at Wattam Kirby Mee
8 年I think the final point you make is the one that many completely misunderstand. The fact that withdrawals can be taxed on the basis that they continue for the following months means often 40% or even 45% tax is being taken without the knowledge of how to reclaim this other than when it comes out in the wash. I have come across individuals who didn't even realise they would pay any tax on the withdrawals. Better education is certainly needed in this area.