How to be wise about your pension

Pat Hutchinson MBE.
Pat Hutchinson MBE.

Q. I am 55 and have a personal pension which I am thinking of accessing. What are my options and is there anything I need to be aware of?

A. New pension rules came into effect on April 6, 2015. You now have more freedom over how you take money from your pension pot.

More people will be able to draw money from their pension funds instead of buying an annuity and for those already doing so, or planning to do so, to draw money more flexibly and with less of a tax charge.

The feature that most people seem to be celebrating is the abolition of the so- called “death tax”, the current 55 per cent tax charge on unspent savings belonging to anyone drawing their pension who dies over the age of 75.

The changes only affect you if:

l You are 55 or over, and

l You have a pension based on how much has been paid into your pot (a defined contribution pension – this could be an occupational pension or a personal pension)

As part of the new legislation the government has introduced a new service called Pension Wise offering free, impartial guidance for those thinking of accessing their pensions.

Face to face appointments with a trained pension guidance specialist are available through Newtownabbey Citizens Advice Bureau.

These appointments will cover:

l The different ways you can take money from your pot.

l What each option means for your circumstances – in particular, how taking money from your pension may affect tax you pay, benefits you receive and debts that you owe.

l Next steps you can take and where to go for further information.

Things to be aware of:

Putting more flexibility into the system, and allowing people to leave unspent funds to their loved ones is bound to make pension saving more attractive.

It could also mean that the unwary could potentially fall victim to scammers, keen to get their hands on this newly-released cash.

The most important thing to be aware of is that these pension reforms apply only to people who qualify to take their pension - in other words, those who are over the age of 55.

If anyone suggests that you can release cash from a pension and you are under the age of 55, or that you should switch out of a final salary pension to get hold of a lump of cash - to pay off debts or invest in another scheme - this is almost certainly a scam and alarm bells should immediately start ringing, however attractive and convincing the offer looks.

Beware particularly of get-rich-quick investment schemes.

Many pension funds, particularly those that are “lifestyled” in the run-up to retirement, are conservatively invested.

This means you won’t see spectacular gains, but you won’t make spectacular losses either - which is important, because the nearer you get to retirement the less time you have to recover any losses that you make.

Only use a reputable independent adviser authorised by the Financial Conduct Authority.

There is some more information on how to avoid pension scams here:

For further information or to book a Pension Wise Appointment call 02890 852069

For non-Pension Wise queries you can get free, confidential and independent advice from your nearest Citizens Advice Bureau – go to or visit Newtownabbey Citizens Advice Bureaux Dunanney Centre,

Rathmullan Drive, Rathcoole, Newtownabbey, BT37 9DQ.

Telephone advice is available 9am-4pm each day 028 90852271 (Lunch: 1:00 - 1:30pm).

E-mail advice is available on: