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Pension pots can boost holiday fund

16 October 2014 10:13

Pension reforms could make it easier for senior travellers to make holiday purchases

Pension reforms could make it easier for senior travellers to make holiday purchases

Opportunities to see more of the world typically peak early and then later in life; before responsibilities take hold, and as financial and family pressures ease.

It's especially true for those in retirement. With mortgages paid off and children having long fled the nest, senior travellers have more time to see the places they maybe never got to visit in mid-life.

But now, there are great opportunities for those over 55 and not yet retired to do exactly the same.

The Government recently announced changes to the pensions system that effectively mean people in this situation will be able to withdraw thousands of pounds from t heir pension pots to use how they will, rather than necessarily going down the traditional annuities route.

According to Chancellor George Osborne, the changes will allow people who have saved all their lives to access "as much or as little as they want" and whenever they want.

Some people may choose to invest the money elsewhere, but the option would certainly be available to use it for a foreign adventure. If heading away while over 60, seniors travel insurance could be easily obtained for a impromptu jaunt, as and when the mood takes.

The added bonus is that the first 25% withdrawn from the pot will not be taxed, meaning there is more of the cash available for a higher star hotel or an extra excursion or two when taking a break.

Previously, most Britons were forced to buy an annuity with their pension savings, which Mr Osborne says may still be the right choice for some people.

However, the Chancellor said the reforms now provide people with a different choice, including taking their whole tax-free lump sum or taking a number of smaller sums.

Ros Altmann, who is the Government's older people's tsar, said the changes mean people effectively can use their pensions pots like a bank account.