“IFS calls for govt to scrap 25% tax-free lump sum”

Feb 8, 2023 | Tax

’Scrapping’ the tax-free lump-sum would not be a simple as it sounds. Nothing in the wonderful world of pensions, ever is. In 2006 ‘Pensions Simplification’ was the New Big Thing. One of its ‘simplifications’ was to limit tax-free cash to 25% of the pension fund, as some types of scheme before then allowed more than a quarter, in some cases all of it to be taken tax-free. If you have one of those, your rights are preserved; great for you, but hugely complicated for us, as most providers have been taken over several times since then and many don’t have a clue. If tax-free cash goes altogether, it can and will only be for new plans. Which will add yet another layer of complication to an already madly confused and confusing system, which even the qualified struggle to comprehend.

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“More than a third of pots non-advised when entering drawdown”

“More than a third of pots non-advised when entering drawdown”

Three headlines this week which should give rise to at least a bit of concern amongst the adviser community. More than should be are taking money, taxable as well as tax-free, from their pensions without taking advice; which might be fine, but how it’s done can have a big effect on both tax and what might be left for the future.