If you're confused about the latest changes to pensions and find yourself wondering how it can affect you, read this easy-to-understand guide from us at thebestofbury.

As of April 6th 2015, new ways to access your pension were introduced by the government. Rather than be limited to the amount of money you take from your retirement fund, this new legislation allows you to decide for yourself how much of your pension savings you want to take. These changes affect those over the age of 55 and are giving much more freedom to how you access that hard-earned pot of cash.

Terms you should know:

Annuity - A fixed sum from your pension which is provided regularly

Income drawdown - The ability to access pension amounts as and when you want it

New changes

Are you over the age of 55? If so, the options below are available to you:

• Tax free lump sum: you can now 'cash in' 25% of your pension in a tax-free lump sum. The balance leftover will then be used to provide a regular pension income.

• Annuity: you can continue to purchase an 'income for life' - given in regular fixed instalments from your pension.

• Income drawdown: accessing parts of your pension without any limit as and when you want it is now available.

• Cash in your entire pension: this option is available but be warned, this could result in you receiving a large tax bill (the first 25% is as previously stated – tax free).

Your own pension plan

Although these pension changes have been introduced by the government, they may not be available through your particular pension plan. This is why it is important you speak to an expert. There could be penalties and fees by changing your plan/ you could be taxed heavily. Bury Financial Advisers have ways in which they can help you access your pension how you want without the heavy cost – allowing you to make the most of your hard-earned money.

What happens when you die?

With the new changes, you can now nominate someone who will receive your pension if you pass away before the age of 75. It will be paid tax-free to your designated beneficiary.

After the age of 75, it could be taxed 45% or paid to your beneficiaries and taxed at their income rate. Again, to ensure your pension plan allows this – you will need to speak to a financial adviser.  Bury Financial Advisers have a friendly, experienced team who, to put it simply, can help you get the most out of your pension. Rather than risk a heavy tax bill, contact them today. All advisers are fully-qualified to deal with your queries - they won’t blind you with jargon but will help you understand your pension better.

Free help

For help and guidance with your pension, contact Bury Financial Advisers on 0161 872 8013 – a free initial consultation is available. For more information, click here. 

Bury Financial Advisers is a firm of independent advisers located in the centre of Bury. As experts in pensions and investments; this local business can help you make the most of your finances. Visit their feature below.