Pension transfer 'should be taken sooner rather than later'

People setting money aside for their retirement who wish to maximise their income now should do so sooner rather than later.

This is the advice of Skandia, which noted the maximum lifetime allowance (LTA) is set to decrease from £1.8 million to £1.5 million on April 6th.

Pension transfer advice may be necessary for those who wish to boost the value of their savings to a higher level than the new maximum before it is too late.

People over the age of 55 in a position to do this are recommended to take this action as soon as possible.

It was noted one option for individuals who wish increase their retirement fund to this level could be applying for fixed protection.

While this can effectively provide the larger LTA of £1.8 million, the disadvantage is that no further pension contributions can be made.

The company previously explained this opportunity is open to those who have access to a secure pension of over £20,000 a year.

A further benefit is that it can provide unlimited access to all the money purchase pension savings that remain open.

Alternatively, some money could be withdrawn from the fund now, which could free up an additional portion of LTA going forward.

Skandia stated this could be a good option for those who wish to continue thinking about their pension transfer options and are considering moving some of their savings into drawdown in the near future.

"This will help maximise their available LTA as the amount withdrawn will be tested against a £1.8 million LTA rather than £1.5 million LTA," commented pension expert for the firm Adrian Walker.

He warned that "accessing pension money is something that should only be considered if the money is required, as any money in drawdown is subject to a 55 per cent tax charge on death."

Ashall Glover Financial Services, pension transfer specialists

Posted by Jonathan Breen