Hornbuckle Mitchell is warning retirees that they will be unable to access their pension through flexible drawdown in the 2011/12 tax year if they make a single contribution after April 5.
The reforms, announced last December, will allow investors to draw down 100 per cent of their savings above a minimum income requirement of £20,000. Director Mary Stewart says anyone that makes contributions will be unable to draw money from their pot until the following tax year.
She says: “The small print says that flexible drawdown cannot be taken in a tax year when contributions have been made and anyone hoping to use flexible drawdown in the next tax year needs to ensure all contributions cease on or before April 5 this year. A single contribution will mean waiting another year.”
The Treasury has been praised for its simplified app-roach to the changes although providers have criticised the Government for pressing ahead with the April 2011 implementation deadline.
Burrows & Cummins partner Billy Burrows says: “Alth-ough flexible drawdown looks attractive, advisers need to be aware of the detail. When people real-ise they will be paying income tax at the marginal rates on withdrawals, they probably will not take their pension all in one go.”