Steve Webb

How to trim tax on pension pot withdrawals

The ushering in of an era of pension freedom by George Osborne four years ago was a revolutionary change. Retirees were no longer compelled to use their pension pot to buy an annuity that would provide them with an income for life; instead, they could leave their money invested and dip into it at will.

This freedom is now taken for granted and widely used. The latest figures from HMRC show that in any given quarter hundreds of thousands of people are taking advantage of the pension freedoms. The average quarterly withdrawal now stands at just over £7,000.

Why pension pots are not always better together

One of the side effects of working for a number of employers over the course of a working life is that you may acquire several separate pensions along the way.

This is especially true today, as the law now requires employers to enrol workers earning more than £10,000 a year in a pension scheme.

A desire for tidiness may lead us to consider combining such pension pots. Indeed, with that in mind, new companies are being set up with business models based on enticing people to merge all their pensions into a single pension pot – which such companies will manage.

Steve Webb: beware pitfall of taking pension cash early

Since the pension freedoms introduced in April 2015, everyone has a range of options as to how to access their pension. These include taking the whole lot out (subject to a potentially large tax bill) or leaving the whole lot in and then taking chunks as and when required. However, although these reforms are described as giving savers ‘pension freedom’, that freedom is not unrestricted.

Steve Webb: the biggest pension freedom trap to avoid

The pension freedoms implemented in April 2015 have been one of the most popular changes to pensions in recent years. Until the changes, most people had little choice but to turn their pension pot into an income for life by purchasing an annuity. But with interest rates at historically low levels and a poorly functioning annuity market, many were getting disappointing value for money.

Just 1% of grandparents are taking advantage of this state pension perk

Pension Clinic: beware the £4,000 pension contribution trap

Once upon a time, the government decided it wanted to simplify the rules around pensions and tax. There were going to be simple annual and lifetime limits on pension tax relief, and lots of the old complexity was going to be swept away. This was in 2006.

But since then, far from leaving things alone, successive governments have tweaked and fiddled with the rules, which mean that it can be a nightmare for law-abiding citizens even to understand what they can and cannot do.

Steve Webb: state pension deferment could make financial sense

Every month, the employment figures seem to show a new record for the number of people working past the age of 65. At the turn of the century, there were fewer than half a million people in employment or self-employment aged 65 or over, but that number has now trebled to more than 1.2 million.

Steve Webb: new ways to solve the cost of long-term care

One of the biggest bills any of us may face in our retirement is the cost of care. While some will have very modest care costs, others could find themselves living in expensive residential care for several years, potentially running up a bill that runs into tens of thousands of pounds or more.

Steve Webb: when it pays to exceed the annual and lifetime allowance

Regular readers will be aware that HMRC imposes both annual and lifetime limits on the amount of money you can save into a pension while benefiting from tax relief on contributions. What is much less widely known is that it is perfectly legal to exceed those limits, and that in some circumstances it can make good financial sense to do so.