According to new research from the Bank of Scotland Investment Service, around half of investors have no plans to take a tax free lump sum from their pensions. This could mean that investors could be losing out on extra cash in their retirement. From 6th April 2006, new pension simplification rules come into force and people will be able to take up to a quarter of their pension fund as a lump sum.
The company believe that as annuity rates are relatively low, the ability to take up to 25% from their pensions as cash, could give pensioners the ability to raise their revenue by reinvestment for income and have the added bonus of access to their capital.
Our view
Taking tax free cash from basically every pension you have is a major bonus of the new pension simplification.
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