Member Article

Hundreds cash in on new pension freedoms with help from North East IFA

Revised rules around pension freedoms has boosted business for a North East Independent Financial Adviser.

Cramlington-based Explore Wealth Management has helped over 100 clients to benefit from the new pension freedoms.

Designed to provide people with more flexibility to decide how and when they access their private pension funds, new legislation enables over 55s to withdraw as much of their pension pot as they like, when they like.

Stephen Sumner, Managing Director at Explore Wealth Management, explained:

“The new more relaxed rules around private pension schemes have proved extremely popular with the majority of our customers.

“We would advise anyone thinking about taking money from their pension pot however to first seek advice from an accredited Financial Adviser, as there are a number of different ways of doing this, some of which are more tax-efficient than others.

“With help from a Financial Adviser, you can simply close your pension scheme altogether and withdraw all of the cash as a lump sum, assuming you haven’t already accessed your pension funds. Alternatively, you can take smaller amounts from your pension pot to help subsidise some of those larger purchases like paying off a mortgage, or buying a car.

“This can be much more tax efficient than simply withdrawing your pension in one lump sum, as the first 25% of any funds you withdraw from your pension pot will usually be tax-free. The remaining 75% however will be subject to income tax at your highest income tax rate, so you need to ensure you don’t unwittingly pay too much tax.” Explore Wealth Management clients, Mr and Mrs Pattinson, used the scheme to gift money to their daughter to help her buy her first house.

Between deposits and conveyancing fees, buying a house for the first time can be a costly business. Despite the number of financial incentives available to first time buyers, for many young people, taking the first step onto the property ladder can be extremely difficult.

Mr and Mrs Pattinson’s daughter didn’t earn a high salary, which meant that she needed to find a deposit of nearly £50,000 to make the house that she wanted more affordable.

With help from Explore Wealth Management Adviser, Steve Cattle, the Pattinson’s managed to release this amount from their private pension funds to give to their daughter. “It was fantastic being able to help Mr and Mrs Pattinson gift part of their pension pot to their daughter for her first house,” Steve said.

“As an added bonus, we also managed to secure the Pattinson’s a relatively high monthly income for their remaining pension fund which they plan to use to supplement other sources of income and enjoy themselves with during their retirement.

“The new pension rules have given people more freedom than ever before with how and when to spend their money, however, it’s always best to be cautious and consult a Financial Adviser before you decide to draw money from your funds as you don’t want to leave yourself short of cash for your retirement.”

If you have a pension fund valued at £100,000 or over, Explore Wealth Management can provide expert advice and guidance to help you to properly manage your pension and plan ahead for the future.

To find out more, visit www.explorewealth.co.uk.

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