In April of this year employees who are aged 55 or more can take up to 100%of their pension and do not have to buy an annuity.
Some may utilise these funds to invest in property or a business so this release of money is likely to have an impact on economic activity some of which may be competitive with your business. It is worth reviewing restrictive covenants to make sure that your business is protected.
Taking part of a pension early will reduce the amount paid out as a pension on retirement from work.
From April new rules will permit over-55s to take their pensions all in one go if they choose. There is no compulsion whatsoever to buy an annuity, the insurance policy that converts your pension pot into a monthly income for life. The Chancellor has also promised pensioners that they can use their retirement fund “like a bank account”, withdrawing payments as and when they like, taking their 25pc tax-free lump sum as they go. At the same time the Government is abolishing the 55pc “death tax” on pensions. From April, beneficiaries who have been named on pension documents will, when the owner dies, be able to access the pension funds themselves with less tax payable – or none at all in some cases.