Pensions reform 2015: What can you do?

Thu 16 Apr 2015

Pension changes have created a golden opportunity for people to become buy-to-let investors

A radical shake-up of pension regulations earlier this month has opened up a raft of new possibilities for people who wish to withdraw their savings and use them to make investments or lavish purchases.

More than 200,000 people are expected to take advantage of the new rules, whether it is to free up cash to buy shares, pay off debts, offer financial support to relatives, book a holiday or, more commonly, to invest in property.

So what exactly can you now do that was not possible just a few weeks ago?

1) Withdraw your entire pension fund as cash in a single transaction

2) Remove small lump sums at times of your choosing

3) Withdraw regular income

What’s more, all of this can be achieved at a lower tax rate than the 55 per cent charged until this month. The first 25 per cent of a fund that is withdrawn is subject to no tax at all, with the remainder taxed at the appropriate income tax band.

Such freedom has never before been on offer to people with a pension and this has resulted in more individuals looking for lucrative buy-to-let property investments in order to make the most of their savings.

No longer are people of a certain age being pressurised into taking out an annuity, meaning they can look at more rewarding investments.

At the forefront of many minds right now is property. So why should you use your pension pot to acquire bricks and mortar?

Picking the right buy-to-let property in the right location can deliver a far greater return than many other investments. As such, it is no surprise a significant number of people planning to cash out their pension intend to put the money into property.

One of the major incentives to invest in property is that you stand to gain in two ways; from monthly rental income and capital growth.

In addition, record - and still growing - tenant demand means new landlords can be extremely confident about letting their buy-to-let property to a quality tenant quickly and experiencing only minimal void periods.

Property can even be left behind in your estate so that your relatives benefit from it, in comparison with many annuity products that only pay out during your lifetime.

There are many reasons to purchase a property, so take advantage of the recent regulatory changes and become a landlord as soon as possible to start enjoying from this most lucrative investment.

For more information or tailored advice backed up by local market insight, please contact your local Leaders branch and speak to one of our property experts.