Pension Freedoms

New pensions freedoms have meant that those planning their retirement have more flexibility than ever about what to do with their savings. However, with greater freedom, comes greater responsibility. Research by the Open University has shown that 70% of UK consumers are unable to answer basic GCSE level questions regarding finance. This is why we have partnered with the Open University to form The Centre for the Public Understanding of Finance. As people navigate the new reforms, expert advice and support is needed now, more than ever.

What Does This Mean for Your Pension Pot?

The reforms have meant that everyone now has more options as to how to make the most of their pension pot. In almost every case, 25% of the sum taken out will be tax free. After hitting 55, this investment can be used more freely, taking out sums, as and when needed.

The Ways You Can Access Your Pension

Leave it. There is no rule that states once you hit your retirement age you should start dipping in to your pension pot, you can leave it there until you need it
• An Annuity. You use your pot to buy an insurance policy that guarantees you an income for the rest of your life – no matter how long you live.
Take the whole amount with 25% tax-free and the rest taxed as an income
Take a 25% tax-free lump sum and draw the rest as a regular income, taxed at your marginal rate
Draw a regular income with no lump sum. Take a regular income with 25% tax-free and the rest taxed at your marginal rate.
Mixing these options. If you’re lucky enough to have a large pension pot, you can mix these options for even greater flexibility.

More on the different ways you can access your pension can be found at

Proper Planning is Paramount

Those approaching retirement need to be aware of these options and how they can implement them. Planning is key to make your money work for your life style. Consideration for life events, such as a family wedding or a dream holiday, can help you adequately account for your cash and budget accordingly. Great advice and the tools to make it happen are key to striking the balance.

True Potential One®

Using our True Potential One® financial planner savings can be visualised easily as can planning how best to spend retirement income, incorporating life events and flexibility. This visual tool can help in understanding the effects of taking a cash lump sum, investing in a drawdown plan and the impact of spending behaviour on hard saved pensions.

The new pension reforms have revolutionised how we can make sure we don’t have to compromise later in life. We think that this is how retirement should be, which is why True Potential One®, aligned with the TPI Pension from True Potential Investments, fully supports the new pension freedoms. Keeping your savings invested or switching into a different investment solution, and taking advantage of the pension freedoms can be a great way to watch a nest egg grow, whilst enjoying the benefits of a flexible retirement income. With our market leading True Potential Portfolios you can be rest assured yours, or your client’s, money is well looked after as it should be.

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