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Lock in gains now the pension shackles are off

24 March 2014

    • Guidance is crucial to ensure savers avoid small pot tax threat

    • Key Retirement Solutions launching tax calculator to guide retirement savers



Retirement savers need to lock in gains from the Budget retirement revolution now the pension shackles are off - but guidance will be vital to ensure customers don't make tax mistakes, over-55s financial specialist Key Retirement Solutions believes.


The pension shake-up gives savers flexibility and control over retirement funding with the launch of new rules on March 27th enabling customers to cash in single pension pots of up to £10,000 and to take total cash of £30,000.


However only the first 25% will be tax-free and people who cash in without guidance on their options risk a tax bill as well as losing out on a long-term retirement income by just taking the money and putting it in a savings account.


Key Retirement Solutions is launching a tax calculator available at from March 27th to help ensure customers benefit from the new pension opportunities. It will provide guidance on potential tax bills to help customers make an informed choice on retirement income.


Welcoming the Budget announcement, Paul Wilson, Managing Director at Key, said: "The retirement saving market has been crying out for the Budget reforms for years and the Chancellor has delivered in spectacular style with the moves on small pension pots particularly welcome.


"It is vital that these reforms are a success and we were pleased to hear the Chancellor give a Government commitment to guidance for every retiree. Key Retirement is already delivering better financial outcomes for our customers because our approach to guidance on the options at retirement is based on the premise of 'offering more options' and not a one-size-fits-all. That's especially important when a major change like this is introduced. Some customers may benefit now from cashing in under the new rules as rates on small pots are often poor but others will value the option of alternatives including standard and enhanced annuities, fixed-term annuities, drawdown and equity release if appropriate.


"The early evidence we are seeing is that people are delaying decisions on annuities once the options are explained. There is a temptation though that people will cash in and give the taxman a boost when they don't need to."


As an example, someone taking a £20,000 fund in cash would pay tax of 20% on £15,000 - £3,000 - and potentially more if the money tips them into the higher rate tax bracket.


Key Retirement Solutions is already using their expertise in guiding consumers through the pensions maze by working with major insurers to help improve their own customer guidance services. It's a formula that has resulted in many of Key Retirement's customers ending up considerably better off in retirement.


Customers who have shopped around for annuity deals are gaining an average of 40% according to the Treasury committee over their original quote. A major driver is the number qualifying for enhanced rates due to medical and lifestyle conditions - Key always asks about health and lifestyle conditions to check whether customers can secure higher rates.


Key Retirement's independent annuity service compares the whole market. The following providers must be included in any list to provide a whole of market service: Aegon, Aviva, Canada Life, Friends Life, Hodge Lifetime, Just Retirement, Legal & General, LV=, MGM, Partnership, Prudential, Reliance Mutual, Scottish Widows and Standard Life.


Customers can call 0808 252 9773 or for more information on Key's annuity service go to

Page last updated: Friday 28 September 2018