People left frustrated by advisers' refusal to help them move "final salary" pension savings may be able to pursue them for compensation. The Financial Ombudsman, the arbitration service, has awarded £50,000 to a saver – known only as "Saul" – after the value of his pension dropped while he was awaiting a response from an adviser. Advisers have been shocked by the decision, as it had been thought refusing to work with a client gave protection against claims. More than a quarter of a million people have swapped final salary pensions – which pay a guaranteed income for life – for "defined contribution" plans. The latter offer greater flexibility, access to cash lump sums, and are more tax efficient... To continue reading this article Start your free trial of Premium Access all Premium articles Subscriber-only events Cancel any time Free for 30 days then only £2 per week Try Premium Access one Premium … [Read more...] about Why advisers who refuse to transfer your ‘final salary’ pension may owe you compensation
Tax free lump sum final salary pension
Answer: Looking at the regulations, a distribution from an ARF on death to a child is subject to income tax at a rate of 30pc or Capital Acquisitions Tax (CAT) at a rate of 33pc - depending on the age of the child. If the child is over the age of 21, income tax applies; if the child is under the age of 21, CAT applies. However, given the specific circumstances of your daughter, you are likely to have to make provision for her to receive assets from your estate through some form of trust structure which will require the trustees to manage her affairs for her lifetime. This is where, unfortunately, the ARF rules are not so advantageous. When a distribution of the ARF is made on death to a trust set up for a child for protective reasons, it is treated as a full distribution by the deceased in the year of death and the Qualified Fund Manager (QFM) must operate income tax at the marginal rate on the distribution. The distribution received by the trust is net of the tax deducted, which … [Read more...] about How do I protect my child from tax burden?
We know we need a pension to help pay for our life when we stop working – but did you know they can be too big? Back in 2006, the Government put a limit on how much people were allowed to save for their retirement – they imposed a tax of up to 55% for anyone that exceeded the allowance and then tried to withdraw a large part in one go. Worse, in the past few years they have significantly cut the amount you can save before it's taxed. And the result is that the amount of money the Government is pulling from people's savings has soared by an astonishing 1,000% since the limit was introduced. The Lifetime Allowance – how it works Pensions are mostly tax free while you save. But there is a limit on how much you can put away over your lifetime or in a single year. Any money over that amount would face punishing 55% tax if you tried to withdraw it as a lump sum, or 25% tax if you took the money as an income instead. At first this limit was set at £1.5million, that … [Read more...] about Massive 55% tax on people who have saved “too much”
Britain’s great final salary pension cash-in is grinding to a halt, new figures show. Although the past year has seen an unprecedented increase in the number and value of gold-plated pensions being swapped for cash lump sums, the most recent figures show a marked slowing. It is thought that more than 100,000 people quit final salary schemes in the 2017-18 tax year alone, cashing in an average of £200,000 a time. But high-profile scandals, including the cases of hundreds of steelworkers who believed they were wrongly convinced to cash in company pensions, have caused a rapid retrenchment to just 20,000 in the first quarter of this year. MPs have warned of “the next pensions mis-selling scandal”... To continue reading this article Start your free trial of Premium Access all Premium articles Subscriber-only events Cancel any time Free for 30 days then only £2 per week Try Premium Access one Premium article per week … [Read more...] about How Britain’s great final salary pension cash-in is grinding to a halt
Do you have one or more existing pension arrangements – a personal pension, retirement annuity or a defined benefit/final salary scheme? For decades traditional pension arrangements offering fixed income payments have been seen as the perfect foundation for a comfortable retirement but do their benefits still outweigh those of managing your own pension pot? The then-Chancellor George Osborne’s Freedom Of Choice reforms in 2015 were the most significant pension policy changes for decades, offering the over-55s the opportunity to have much greater say over the future of their money. Initially, some people dashed for the tax-free lump sums of 25% of their pension pots but now there is a wider debate over whether the pension benefits of more traditional schemes outweigh the more flexible options now available. More traditional schemes, such as annuities and those offered by some employers offer an index-linked income, part of which may be payable to a surviving spouse or civil … [Read more...] about Making the right choice for your pension