People reaching the relevant retirement age before 2016 could double their income from their private pension under new rules, tax expert Owen Kyffin, a director of Whitley Stimpson said this week.
Owen said: “it is possible for some people to double their income from their private pension by exploiting the new savings freedoms to boost the value of their state pension. The good news is that the new situation will benefit savers with modest funds more than anyone else.”
But he warned: “Many people may not want to take this step on their own because the whole situation surrounding pensions has changed dramatically since announcements in the last budget, and getting there can be very complicated.”
Owen explained that people could enhance their income in retirement by using the funds from a private or company pension scheme and delaying the date they take the state pension, which was not possible until the Chancellor gave people the opportunity to have complete flexibility over how they access their pensions.
He said: “Those who are retiring now or in the near future are looking hard to find a reasonable return on their pension pot or savings because interest rates are so low.
“Understandably, most people with a modest pension cannot afford to take risks with their money, which rules out buying shares on the stock market. This makes drawing down money from their pension and delaying their old age pension until it gains in value a better option for many people, although care needs to be taken to make sure death benefits are not adversely affected.
“Anyone reaching retirement age by April 2016 would be well advised to take advice from an expert now.” he said.
Whitley Stimpson advises face-to-face on all aspects of pensions and tax affairs and Owen Kyffin can be contacted on 01295 220914 or owenK@whitleystimpson.co.uk