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23 Apr 2014

Maximising Pension Savings: Things You Need To Know

At a time when the UK´s pension system is going through serious reforms, making sure that you have secured the best retirement income is essential. There are a number of steps that can be taken to boost retirement income but the most critical of them is to keep saving.

The best thing about pensions is that each saver is entitled to tax relief. Basic-rate taxpayers can get a 20% immediate tax relief and higher-rate taxpayers can claim a further 20%. With the latest changes announced in this year´s Budget, one of the main deterrents for pensions - annuities - has also been cleared. Pension savers will now be allowed to withdraw their entire savings if the amount does not exceed £30,000 and still have a quarter of their pot tax-free. This makes investments into a pension a lot more attractive, the Daily Express reported.

The reforms also have the potential to boost the self-invested personal pensions (SIPPs) market. SIPPs allow savers to have control over their savings and manage their investments on their own. They work best for people with several pensions across a number of employers who want to bring them together.

If you are over 55 and a member of a defined contribution scheme, you will be allowed to treat your pension savings in the same way as a bank account. This means you will be able to withdraw as often and as much as you like as of April 2015. To help people make the right decisions with their money, every saver will be entitled to one free advice session. This will help them choose from the range of investment options available, the Express stated.

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