Under 55’s must move quickly for tax-free pension cash
Pension savers who are less than 55 years old who have the chance to dip in to their pension pots for a tax-free lump sum need to take action while they still can.
Anyone who is a QROPS, SIPPS, SASS or other pension saver who celebrates their 50th birthday on or before April 5, 2010 hits that golden barrier that is the youngest age when a pension can be drawn.
But from April 6, 2010, the bar is lifted another five years to 55-years-old and your pension cash must remain untouched until then unless the pension has a specific clause allowing earlier retirement.
Think QROPS to avoid annuity trap
Expats or international workers with UK pension rights need specialist advice about whether to transfer any UK funds in to a QROPS to avoid the annuity trap.
Current annuity rates in the UK are a typical 3% - 4%, but a QROPS offshore pension removes the obligation of buying an annuity and accesses more flexible investment opportunities.
Time is running out to debate these important financial decisions with an independent financial advisor and to set the process in motion to make best use of retirement funds.
Transferring a pension from the UK to a QROPS can take 12 - 16 weeks from start to finish, and that means if savers do not spring in to action now, they may miss out on the chance to cash in.
Pension firms confirm rush for funds
Even if your 50th birthday is only a day or two before April 6, 2010, you can still prepare your retirement plans now to drawdown 25% of your pension fund tax-free.
Several pension providers in the UK are reporting a rush from investors in their early 50’s to access funds.
Standard Life head of pensions policy John Lawson said: ‘There has been an increase in the number of people in their early 50s accessing their pension.’
In the past year, Scottish Life reports a 20% in investors aged less than 55 drawing their pension.
