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Pension Freedoms………..personal versus a business viewpoint

In April 2015 the much publicised changes in pension flexibility are due to come into force and there has been much media and other commentary on the likely choices individuals may make. Some people could choose; a flexible drawdown approach, review whether annuities still provide the best option, fund other pensions from income from another pension, (within statutory limits), or even “blow the lot” on an expensive car, luxury home or fritter away on other activities such as holidays. In the latter case it must be noted that the balance of pension withdrawn, over and above the tax free maximum of 25%, will be added to any other income earned and taxed at the relevant marginal rate.

If you have reached or are approaching retirement age then there could be interesting decisions to be made, assuming that a significant “pension pot” has been accrued. For those in their twenties and thirties there is some attractiveness to being able to access a pension more flexibly, however the age at which they will be able to do this may well be moved upwards by successive governments.

A more interesting point is for businesses that possibly will have a number of the senior management team approaching retirement age or perhaps considering early retirement. If succession planning has not been part of a company’s risk strategy or no attention has been paid to the replacement of key personnel, then potentially critical business knowledge will depart with those retiring. There could be a significant loss to businesses of all sizes over the next couple of years if the risk and business plans of a company do not address pension flexibility.

MW Interim Finance can assist you in compiling or reviewing your business / risk plan in key commercial areas of your business, in addition to providing an independent CFO/FD resource on an interim basis. For further information or a confidential discussion about your specific requirements, please contact Martin Walby FCMA CGMA on + 44 (0) 7876 566875 or email martin.walby@mwinterimfinance.co.uk