Restrictions on Your Existing UK Pension
There are a number of hard facts about your current UK Pension which you may not be aware of.
Read more on the restrictions on UK pensions.
- At age 55 (or 50, depending on when you were born) you can take a 25% Tax-Free Lumpsum.
- By age 75 you have to take an annuity or face an 82% tax charge on your UK Pension.
- Annuity rates are currently around 2 to 3% (which is very low!)
- This low annuity is taxable at 21%. Thus, the little you are receiving will be taxed.
- Before you reach retirement age, UK Pension funds target a growth that exceeds inflation. Thus, many UK Pensions have shown little growth (around 3% p.a.), and many have even lost 20% in the last few years. This means that some people are not able to retire when they want to!
- If you die, your spouse or beneficiaries will not receive your UK pension. 50% will return to the UK Pension Company, and the remaining 50% will go to your spouse. (In many instances it has to be your first spouse, otherwise it all returns to the UK Pension Company.)
- If you and your spouse die (i.e. in a motor accident), none of your funds will be passed on to your beneficiaries. 100% of your UK Pension will go back to the UK Pension Company.
- Finally, there is a UK Pension crisis, which means that due to the aging population, more people are withdrawing funds than replenishing them. Thus, when you retire, the pension fund may be bankrupt and unable to pay out your pension.
Read more on the restrictions on UK pensions.