A Guide to April 6th 2015 Pension Changes

May 30, 2015 | Retirement Planning

Utilise your Options for a Better Retirement

From April 6th 2015, pensions become more flexible and arguably more useable. Crucially, the control of your pension will pass to you, putting it firmly in your hands. The purpose of this post is to outline your options in wake of Pension Freedom, which kicks in, on April 6th 2015.

Pension Schemes from April 6th 2015

Pensions have not changed much in decades. When the annuity schemes came about jobs were for life, and as such the annuity model was better suited. Now jobs are more transient, and the old annuity style has arguably become too restrictive to keep pace with this change.

Under the annuity system the stock market is key to how much you have to live on. Thanks to the crash in 2008, the value of pensions has not performed well. Typically, a pension worth £50,000 today would pay out £2800 a year. Even prior to the 2008 crash, it would only have yielded £3,550.

As a result, Pension Freedom has been developed and the new changes will affect you providing you do not have a public sector pension, or defined benefit scheme. The new system is far less restrictive.

Although the new system is still stock market performance dependent, it has several clear benefits. They are:

  • You no longer have to buy an annuity. If you have an annuity you can cash this in. This was announced in the last budget.
  • You can withdraw chunks of your pension from age 55. This is subject to tax at the marginal rate
  • If you die before the age of 75, you can ensure your pension goes to a loved one tax free
  • From April 6th 2015 spousal benefits payable under annuities will be tax free

Pension Changes and Quality of Life

David Rose is a retired director of an optical company. Two years ago his quality of live was severely impeded when he became affected by government legislation. His pension was capped under legislation which was designed to stop drawdown pension pots running out. As such, David lost over 50% of his monthly income.

He is delighted new changes are coming into affect and that he will soon have more control of his finances. He said:
“I am delighted the pension’s world is freeing up.

“People who save diligently throughout their working lives are not going to splurge out on a fast car. Responsible savers make responsible retirees.

“‘I am meeting my financial adviser next month to see what I should do in light of the changes,

“I might transfer my pension to a plan where I have free rein to withdraw money as and when I need it.”

Pension Changes and Spit the Dog

Another good example of these benefits in action can be seen by looking at Robert Johnson’s situation. Robert Johnson better known to people of a certain age as Bon Carolgees, who together with ‘Spit the Dog’ entertained millions of children on legendary TV show Tiswas in the late seventies, is planning to take full advantage of the new changes.

Robert is now 66 and runs a successful retail business. He is planning to retire and has welcomed the changes. He said:
“I am selling my business, but this will take time, so I was pleased when my adviser said I could use funds without restriction from my pension to meet short term costs.

“If people have saved for their retirement, then I think they should be treated as adults and allowed to access their money when they need it.

“If people have been sensible enough to save they’ll probably be sensible enough to hold pension money back to support themselves later in life.”


Critics of the changes have pointed out that unforeseen tax bills could catch people out. There is some merit to this argument, and closer examination of your finances will be necessary to find the best deal for you.

Therefore, take advantage of my award winning financial knowhow, and get in touch. Simply click here and complete the Call Back Service form. Together we can make sure you have control over your retirement.

Source: This is Money

For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at [email protected]


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