How to get the most out of pension tax advantages
By Cristian Angeloni, 3 Feb 22
Personal finance experts share 10 tips savers should be aware of
“Reforms introduced in 2015 – dubbed ‘pensions freedoms’ – mean today’s pension savers are no longer shoe-horned into buying an annuity with their pensions and have much greater flexibility in how they access their pension pots,” Lowery said.
“But those planning to access their pension flexibly, either this tax year or next, need to think carefully about both the tax impact and the effect it will have on their ability to save further amounts into pensions in the future.
“Anyone who makes a flexible withdrawal from their retirement pot beyond the 25% tax-free lump sum triggers the ‘money purchase annual allowance’ (MPAA). This permanently slashes their annual allowance from £40,000 to just £4,000, and revokes the privilege to carry forward unused allowances from previous tax years.
“This measure was introduced to stop people recycling money through pensions to benefit from extra tax-free cash.”
Tags: Pension
