After the Budget announcement, how much can be taken from a pension?

If you have a small pension…

The small pension fund benefits allowance, known as Trivial Commutation, has increased from £18,000 to £30,000 from the 27th March 2014 for people aged 60 and over. In addition to the triviality rules, you are also allowed to take a number of small and stranded pension pots as a lump sum, regardless of your combined total pension wealth. The number of pots has increased from two to three pots and the value of these pension pots has increased 5-fold from £2,000 per pot to £10,000 per pot.

If you’re in capped drawdown…

This popular alternative to purchasing an annuity allows the retiree to draw an amount each year from their pension at a government set capped amount. With this capped amount being at historically low levels, it has meant a real impact on people choosing this way of taking pension income. The limits have recently increased from 100% of the Government Actuary Department (GAD) rates to 120% recently and now to 150% of GAD.

What are the changes to flexible drawdown?

As the name suggests, there is no capped limit on the amount you can withdraw under flexible drawdown. However, you must have a minimum guaranteed pension income of £20,000 per year in retirement in order to benefit from this flexibility. This minimum guaranteed pension income has been reduced to £12,000 gross per annum.

This entry was posted in News. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *