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A-Day change |
What it means to you |
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One simplified set of tax rules
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The freedom to join any type and number of pension plans. No need to switch between
pension plans in search of tax benefits.
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Wider choice of pension investment options
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More flexibility and freedom to potentially invest in more interesting options that
fit in with your lifestyle.
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A new system of allowances
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Every individual can contribute up to 100% of their earnings and still benefit from
tax relief.
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Tax-free cash
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The maximum you are able to take as tax-free cash is 25% of your fund or 25% of
the lifetime allowance – whichever is the smaller.
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New retirement options
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A wider choice of annuities, income drawdown options and no requirement to buy an
annuity at the age of 75.
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Removal of the ‘normal’ retirement age
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The opportunity to take a phased approach to retirement where you can work full
or part-time while also taking pension benefits.
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Increased pension age
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The minimum age at which you can take your pension will rise from 50 to 55. If you
are planning to retire before the age of 55 after 2010, talk to your financial adviser.
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Pension rights protection
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With primary or enhanced protection, you can reduce or eliminate any excess tax
liability and safeguard any rights you have to a tax-free cash sum in excess of
the new 25% limit.
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‘Protected rights’
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You can take a tax-free cash sum up to 25% of your total fund or lifetime allowance,
whichever is the smaller.
You can draw benefits from the age of 50 before 2010, and 55 after 2010.
No requirement for a minimum annual increase when your pension starts being paid.
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Death benefits
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If you die before you take any benefits, the value of your pension fund will pass
to your beneficiaries.
If you die after starting to take your benefits, any death benefit paid will depend
on the type of pension plan you hold.
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The Financial Services Authority has a dedicated pensions website and range
of A-Day publications for consumers.
Visit this at: www.moneymadeclear.fsa.gov.uk/pensions
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