Page 24 - Budget Newsletter - March 2023

Drawing your pension

If you are due to start drawing an income from your pension plan, make sure that you take advice
about your options, especially in the light of the Budget changes. While the Financial Conduct
Authority (FCA) has required providers to offer pointers to guidance and some default investment
options, these do not amount to personal advice: the final decisions rest with you. There is no
attempt to integrate your pension arrangements with other aspects of your financial planning, e.g.
estate planning.

If you think how long you might live with the cost of a wrong choice, it is clear that getting
independent advice is the route to take.

Planning Points

The current death benefit rules mean your pension plan could provide income for future
generations, as your beneficiaries will be able to pass the remaining fund to their children and
so on down the line. One consequence is that, from a IHT planning viewpoint, it can be better
to draw on – and even run down – non-pensions assets in retirement rather than use your
pension arrangements as a source of income. The further freeze to 5 April 2028 in the nil rate
band has heightened the attraction of pensions as part of estate planning.

PARENTS

Childcare

Major extensions to free childcare provision in England were announced by Mr Hunt, although they
do not take effect for at least a year:

• From April 2024, working parents of two year-olds will be eligible for 15 hours of free
childcare per week.

• From September 2024, 15 hours availability will be widened to include working parents of
children aged between nine months to two year-olds.

• From September 2025, all eligible working parents of children aged nine months up to three
years will be entitled to 30 free hours per week.

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