Lamborghini Sales Won’t Drastically Increase in April, and Tax Issues May Conjure Shocks
Given the changes to Pensions coming in April 2015 and recent comments by Pensions Minister Steve Webb, you could be forgiven for thinking that the sales of super cars and ‘once in a lifetime’ holidays were going to increase considerably.
In April 2015 people aged 55+ will have early access to their pension pots. This, combined with Pension Freedom where you can withdraw as much of your pension as and when you want to, will give retirees unprecedented access to their pension funds.
Despite the potentially big increase in spending power, surveys carried out by Warner Leisure Hotels and Mintel; suggest most people will be adopting a cautious approach.
- Three in five surveyed said they had no intentions of retiring early, while half of Warner’s guests stated they were unaware of the changes coming into play.
- A third however, stated they thought the early pension fund access was marvellous, arguing it is their money and they should do with it what they want.
- Of those that are going to take advantage of pension changes, 10% stated they were going to invest the money, while almost 25% stated that the money will be used to top up funds for grandchildren.
This theme seems to be a trend with 33% of respondents stating their priorities were leaving money behind for their family. According to survey results 16% were using the money to support their family.
While 36% of respondents aged over 55 are planning to keep working either in a full or part-time capacity, and over half of those surveyed believed they were going to have to work past retirement age to make ends meet.
Meanwhile another survey from Fidelity Worldwide Investment revealed that many people approaching retirement were unaware of the tax issues of Pension Freedom, part of new pension changes coming into play in April 2015.
Of the 525 respondents, only 58% knew that 25% of their pension would be tax free on withdrawal, while 2% believed that every penny of their pension would be taxed.
A similar survey carried out in June 2014 showed that just over a quarter understood the tax implications of Pension Freedom.
Almost a fifth of respondents stated that they were planning to take more than their tax free amount, and yet half did not understand the tax implications of doing so.
Alan Higham of Fidelity said: “There are around 150,000 people who have put off retiring this in 2014/15 compared to past years with many waiting for the new freedoms to come into effect to take action.
“What our findings show is that the tax implications of accessing your pension could be the biggest issue for this set of retirees.
“If they don’t engage with the tax rules around accessing their pension now, while they are in the planning stages, they could be in for a huge surprise when their bill arrives from the HMRC.”
How do I plan my retirement and avoid hefty tax bills?
It cannot be overstated the importance of good retirement planning. The tax survey in particular has showed that quite a few people approaching retirement are unaware of the tax implications that they are going to incur. Just imagine how shocking it will be to be hit with a tax bill for a few thousand when you were not expecting it.
With this in mind click here and complete the Call Back Service form. Together we can plan your retirement, freeing up as much cash for you as possible.