1. Taking Benefits

Pension benefits can be taken from age 50; this minimum age will rise to 55 in 2010. Benefits can be deferred until age 75, income does not have to be taken after this date but it is the last opportunity to take benefits as tax-free cash. It is possible to take 25% of your pension fund (up to the lifetime allowance) in the form of a tax free lump sum. If you had benefits that accrued prior to 6th April 2006 in occupational pension schemes it is possible that you are entitled to an amount in excess of this and your Financial Adviser will be able to establish this for you.

When benefits are taken, the accrued pension funds are tested against the Lifetime Allowance. This has been set as £1,500,000 in 2006/07 and rises gradually to £1,800,000 in 2010. Further increases will be announced in the future. If your total pension fund is in excess of this amount a tax charge will be levied on the excess. If your funds were in excess of this or approaching this figure on 5th April 2006 it may be possible to protect a higher amount from the tax charge. Again, your Financial Adviser will be able to provide more information.

There are various ways of taking pension benefits and it is generally possible to find a method that can be tailored to your individual requirements. At age 75 it is no longer mandatory to purchase an annuity, however, funds must move into some form of retirement product at this time.

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