New freedoms — new responsibilities

This article has been supplied by our channel sponsor, Pension Quality Mark.

The biggest pensions shake-up for many years takes effect from 6 April 2015, when millions of people will be able to access their retirement savings more flexibly once they have reached the age of 55.

They will be able to withdraw as much (or as little) money as they wish each year — and will only pay their marginal rate of income tax on their withdrawals. They could withdraw their income in slices, with 25% of each slice paid free of tax. And no-one will have to buy an annuity.

Now that people have been entrusted with the responsibility of spending their own pension savings as they see fit, it is more important than ever that they understand what they are doing. No-one wants to run out of money and have an impoverished old age.

The Pension Quality Mark (PQM) thinks that people must be given appropriate information on which they can base their decisions. Schemes applying for the PQM must be able to demonstrate that their communications with members are clear, engaging and provide all the information necessary for members to take decisions about their pension and retirement. This might include signposting members to further sources of information. 

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Nowadays, pension information does not have to be boring — pension schemes often produce brightly coloured, magazine-style publications, or use media such as interactive websites, email or ‘credit cards’. If you see the PQM logo, you know that the scheme’s communications have received our approval.

Tracey Dawson