Pension changes from April 6th

t’s just over a week until the pension changes that take effect from April 6th (well, in reality it will be the 7th as the 6th is Easter Monday!). There’s been a lot written about the changes since they were announced in the Budget last year, but – understandably – many people still find them confusing. So here’s my bite-sized guide:

• You can take money out of your pension if you are aged 55 or over after April 5th.


• The people who are most likely to benefit are those who have a ‘pension pot’ type pension (ie one where you – and your employer if you have one – pay into a pension). If you have a final salary or other salary-related pension, you can only take money out of it, in most cases, if you’re in the private sector. You’ll have to take advice about this and transfer it first.

SAVVY TIP : In most cases, giving up the guaranteed income of a salary-related pension will be a bad move. But for some (such as those who are seriously ill and unlikely to live for long) it could be worth considering.

• You can take out as much or as little as you like – but check with your own pension company because some may be more flexible than others.


• Only the first 25% of anything you take out of your pension is tax free. You’ll have to pay tax on the rest. You could end up paying tax at 40% if you take out too much.


• You’ll probably be taxed using the emergency code for the first payment. Unless your pension company already has your tax details, your first payment could have emergency coded tax deducted – which will be more than you need to pay.

SAVVY TIP : You’ll get the extra tax repaid when you take more money out of your pension, but if you take it all out in one go, you’ll have to reclaim the tax.

• You can get free guidance about your pension options through the government’s Pension Wise initiative, by phone, face-to-face or online. You can make a phone appointment by ringing 0300 330 1001. If you prefer, you can get online information at Pensionwise.gov.uk

SAVVY TIP : If anyone rings you saying they’re from Pension Wise, they’re not! The way that Pension Wise will work is that you will have to ring them to make an appointment. They won’t ring you first.



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Pension changes from April 6th