The new flexi-access drawdown options will be available to all existing and new CRA customers and for all nominated beneficiaries (in the event of a customer’s death), giving customers flexibility on how they wish to use their pension savings to provide income and leave any remaining wealth when they die.
People will be able to set up monthly income payments similar to a salary or take ad hoc withdrawals from uncrystallised funds at intervals that suit them. The tax free cash element (normally 25%) can either be taken in one go up front or taken in instalments as part of each ad hoc withdrawal.
Customers currently in capped drawdown will be able to convert their account to flexi-access at any time from April 6, 2015, or they can continue to use capped drawdown in order to maintain their current annual contribution allowance.
There will be no specific charge to use any of the new flexi-access drawdown facilities; customers will only pay the normal platform charge and underlying fund charges of their investment portfolio.
Adrian Walker, Old Mutual Wealth’s Retirement Planning Manager, said: “We believe that people should be trusted with their pension savings and so are pleased to be offering flexible access aligned with the new rules. However this isn’t about products or even the new rules, it is about people and their money. Each individual needs to fully understand their personal circumstances, looking at all of their savings, not just their pension before deciding on their future income planning.
“The guidance guarantee is fine but it will be no substitute for professional financial advice. With more flexible withdrawal options and new tax effective ways in which people can leave pension savings to nominated beneficiaries when they die, it can be argued for many that their money purchase pension savings should remain invested for as long as possible. There is a danger that people get carried away with the new freedoms if they don’t seek advice and as a result suffer unexpected tax bills or loss of future benefits. The Government’s Pension Wise guidance service should make people aware of the options and this in turn will lead to higher demand for financial advice.”