It Has Been Claimed That A- Day Is Set To Be The Biggest Shake- Up That Pensions In The UK Have Experienced In Over 60 Years But It Has Also Left Many Wondering What A- Day Is And What Pension Advice They Will Need To Prepare For It

Category: Finance, Financial Planning.

It has been claimed that A- Day is set to be the biggest shake- up that pensions in the UK have experienced in over 60 years but it has also left many wondering what A- Day is and what pension advice they will need to prepare for it.

What is A- Day? Below we take a closer look at A- Day and what it might mean for the average worker. A- Day refers to the changes to the UK pensions which is set to occur in April this year. The main idea behind A- Day is to" increase choice and flexibility for all" . What is the aim of A- Day? The government s broad aim in the introduction of the new pension rules in April 2006 is to simplify the existing pension rules.

In a nutshell, A- Day aims to take the pressure off agencies that need to give pension advice by actually simplifying the whole pension system. The rules will affect all pensions including personal and work pensions. What pension changes will occur with A- Day? Furthermore, the entitlement in the Occupational Pension Schemes can actually be less than 25% . The Standardisation of Tax Free Cash- The tax- free cash sum entitlement currently differs between Pension Schemes. The simplified pension rules will ensure that Tax Free Cash allowance of all Pension Schemes is set at 25% of the fund value as standard.

Alternatively Secured Pension- An Alternatively Secured Pension will also be introduced which will mean that after the age of 75 withdrawal of income will be known as" Alternatively Secured Pension" and will be similar to income drawdown. If you have an occupational pension where the tax- free cash entitlement is higher than 25% then you will need to seek pension advice from an experienced Independent Financial Adviser, who will be able to help you protect this right. This allows you to draw an income, up to a maximum of 70% of the highest single- life annuity, each year from your pension fund. You may also be able to sell and buy these properties between individuals. Greater Flexibility in Investment- There will also be greater flexibility in investment including the provision enabling you to hold residential property within your pension fund. Contributions- The amount you can currently contribute into a pension scheme is capped but A- Day is set to change all this. Who will be affected by these pension changes?

As of April this year, there will be no maximum amount of pension saving. Actually nearly everybody who will work or has worked will be affected by these pension simplification rules. Where is the best place to get pension advice regarding A- Day? It will impact on any individual who already has a pension in place or any individual who will start a pension plan at any point in the future. It is always highly advisable to discuss any pension advice you may require with a professionally trained financial adviser. It is also worth noting that you should always check that any financial adviser you speak to is registered with the FSA and is thereby duty bound to offer you unbiased advice.

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