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The main idea behind ADay is to “enhance everyone’s choices and flexibility.” The general purpose of the government to introduce a new pension system in April 2006 is to simplify the existing pension system.
The rules will affect all pensions including personal and workplace pensions. A-Day aims to take the pressure off agencies that need to give pension advice by actually simplifying the whole pension system. You may also gather more details about the company from (“Contact Us“) section on their website.
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What pension changes will occur with A-Day?
1. The Standardisation of Tax-Free Cash –
The tax-free cash sum entitlement currently differs between Pension Schemes. Furthermore, the entitlement in the Occupational Pension Schemes can actually be less than 25%.
The simplified pension rules will ensure that the Tax-Free Cash allowance of all Pension Schemes is set at 25% of the fund value as standard. If you have an occupational pension where the tax-free cash entitlement is higher than 25% then you will need to seek pension advice from an experienced Independent Financial Adviser, who will be able to help you protect this right.
2. Alternatively Secured Pension –
An Alternatively Secured Pension will also be introduced which will mean that after the age of 75 withdrawal of income will be known as “Alternatively Secured Pension” and will be similar to income drawdown. This allows you to draw an income, up to a maximum of 70% of the highest single-life annuity, each year from your pension fund.