Usa tu pension del Reino Unido para comprar una propiedad en España
Options for using your pension pot - Why not buy a property in Spain with it?
Following changes introduced in April 2015 you now have more choice and flexibility than ever before over how and when you can take money from your pension pot. Take your time to understand your options, and get help and advice as what you decide now will affect your retirement income for the rest of your life.
Taking your pension from April 2015
Did you know?
You must have reached normal minimum pension age to access your pension pot – currently 55 (or earlier if you’re in ill health or if you have a protected retirement age).
Changes introduced from April 2015 give you freedom over how you can use your pension pot(s) if you’re 55 or over and have a pension based on how much has been paid into your pot (a defined contribution scheme).
Whether you plan to retire fully, to cut back your hours gradually or to carry on working for longer, you can now tailor when and how you use your pension – and when you stop saving into it – to fit with your particular retirement journey.
There’s a lot to weigh up when working out which option or combination will provide you and any dependants with a reliable and tax-efficient income throughout your retirement. Be sure to get financial advice.
Your options at a glance
Under the new flexible rules you can mix and match any of the options below, using different parts of one pension pot or using separate or combined pots.
Read each option, including the benefits, potential risks and tax implications. Not all pension schemes and providers will offer every option – even if yours does be sure to shop around.
Leave your pension pot untouched
You may be able to delay taking your pension until a later date. Your pot then continues to grow tax-free, potentially providing more income once you access it.
Use your pot to buy a guaranteed income for life – an annuity
You can choose to take up to a quarter (25%) of your pot as a one-off tax-free lump sum then convert the rest into a taxable income for life called an annuity. There are different lifetime annuity options and features to choose from that affect how much income you would get. You can also choose to provide an income for life for a dependant or other beneficiary after you die.
Use your pot to provide a flexible retirement income – flexi-access drawdown
With this option you take up to 25% (a quarter) of your pension pot or of the amount you allocate for drawdown as a tax-free lump sum, then re-invest the rest into funds designed to provide you with a regular taxable income. You set the income you want, though this may be adjusted periodically depending on the performance of your investments. Unlike with a lifetime annuity your income isn’t guaranteed for life – so you need to manage your investments carefully.
Take small cash sums from your pot
You can use your existing pension pot a bit like a savings account, to take cash as and when you need it and leave the rest untouched where it can continue to grow tax-free. For each cash withdrawal the first 25% (quarter) is tax-free and the rest counts as taxable income. There may be charges each time you make a cash withdrawal and/or limits on how many withdrawals you can make each year.
With this option your pension pot isn’t re-invested into new funds specifically chosen to pay you a regular income and it won’t provide for a dependant after you die. There are also more tax implications to consider than with the previous two options. WITH THIS OPTION YOU CAN BUY A PROPERTY IN SPAIN, NOT ONLY GIVING YOU AN INVESTMENT THAT MAY APPRECIATE IN TIME, PROVIDES A PLACE IN THE SUN THAT WILL ALLOW YOU TO ENJOY PRE-RETIREMENT NOW!!
Take your whole pot as cash
Did you know?
Cashing in your pension pot will not give you a secure retirement income. Get guidance from followed by financial advice before you commit.
You could close your pension pot and take the whole amount as cash in one go if you wish. The first 25% (quarter) will be tax-free and the rest will be taxed at your highest tax rate – by adding it to the rest of your income.
There are many risks associated with cashing in your whole pot. For example, it’s highly likely that you’ll be landed with a large tax bill, it won’t pay you or any dependant a regular income and, without very careful planning, you could run out of money and have nothing to live on in retirement. Be sure to get financial advice before cashing in your whole pot.
To find out more and understand the risks associated with this option see Taking your whole pension pot as cash
Mixing your options
You don’t have to choose one option when deciding how to access your pension – you can mix and match as you like, and take cash and income at different times to suit your needs. You can also keep saving into a pension if you wish, and get tax relief up to age 75.
Which option or combination is right for you will depend on:
When you stop or reduce your work
Your income objectives and attitude to risk
Your age and health
The size of your pension pot and other savings
Any pension or other savings your spouse or partner has, if relevant
Whether you have financial dependants
Whether your circumstances are likely to change in the future
Once you understand your choices, we recommend you speak to a financial adviser who will be able to recommend which option (or combination) is best for you and help find you the most competitive products.