Pension expert Steve Webb, a former Pensions Minister, fields a high volume of inquiries on private pensions daily. This roundup highlights the 12 most common topics, drawn from frequent reader questions.
1. Tax-Free Lump Sums
Key concerns include whether governments will eliminate or reduce tax-free lump sums. Individuals aged 55 ask if they can withdraw £15,000 tax-free while continuing contributions. Others debate choosing a £64,000 lump sum versus £1,100 monthly payments from local government pensions, or splitting a 25% tax-free amount across years. Some question why HMRC blocks a permitted 33% tax-free withdrawal.
2. Financial Advisers
Common queries cover switching workplace pensions to SIPPs managed by advisers, key questions to pose during adviser meetings, and reclaiming fees like £60 monthly charges for inactive services from past advisers.
3. Tracing Lost Pensions
Many seek assistance locating long-forgotten pots potentially worth thousands, along with practical tips for reuniting old pensions.
4. Tax Issues
Questions explore the benefits of pension tax relief, perceived penalties on 25% tax-free cash post-lifetime allowance changes, whether low earners will gain tax relief on contributions, spousal tax allowance transfers after state pension age, and tax return requirements.
5. Pension Withdrawals
Inquirers born in specific 1970s windows ask if they qualify for access at 55 rather than 57. Others compare Nest’s strict withdrawal and tax rules against other schemes, or weigh taking NHS pensions at 55 versus delaying to 60.
6. Annual Increases
Debates arise over pensions losing RPI inflation links after 2030, modest increase amounts, and possibilities for mandating ‘triple lock’ rises in company schemes.
7. Annuities
Topics include how 100% joint life annuity guarantees function, using immediate needs annuities for care fees, tight deadlines for converting multiple pensions into annuities yielding £17,500 yearly, inheritance risks if spouses pass first, and whether 70-year-olds with £220,000 invested funds should annuitize.
8. Consolidating Pensions
Individuals with multiple pots, like ten from a spouse, seek consolidation strategies. Complaints involve intrusive transfer questions, unnotified £300,000 drops in cash transfer values, and rights to refuse certain queries.
9. Pension Security
Worries focus on final salary schemes nearing insolvency before age 65, transfers to insurers at risk of failure, overall pension safety amid confusing rules, and Pension Protection Fund practices like 2.5% raises despite ample reserves.
10. Late-Starting Pensions
Professionals aged 45 renting without pensions question if they should be concerned about starting late.
11. Rogue Employers
New employees without employer pensions seek options, while nannies pursue enrolment from unresponsive ex-employers.
12. Inheriting Pensions
Queries address passing local government pensions to daughters, adult child inheritance under new tax rules, spousal flexibility without children, and tax-free transfers for married couples post-Budget changes.
