Thanks to pension reforms, there are now more options for using your private pension pot. Since April 2015, some people over 55 have greater freedom in how they can access their pension pots – the money they’ve built up during their working life.
Do the changes affect me?
The changes to private pensions affect those in a defined contribution pension scheme. This is one where you build up savings (your ‘pension pot’) throughout your employment to fund your retirement.
Before making any decisions, it's important that you consider your options and the impact that your decision could have on your tax bill or benefit entitlements.
You won’t be affected if:
- you’ve already accessed your pension savings, e.g. by buying an annuity
- you have a defined benefit pension scheme, also known as a ‘final salary’ pension. This gives you a retirement income based on your length of service and salary.
What do the changes mean for me?
If you have a defined contribution pension, you have more options for how to use the money according to what best suits your needs. You are no longer restricted to simply buying an annuity. Instead, you can withdraw some or all of the money as a lump sum.
It’s important to seek advice before making any decisions as the options you choose could affect your income, overall retirement savings, your benefits entitlements and how much tax you pay.
More information on what you can do with your pension pot