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Money Box: Pensions revolution; Cash is king; Paying for childcare

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22/03/2014

Pensions revolution; Cash is king; Paying for childcare

BBC Radio 4 - Money Box, Pensions revolution; Cash is king; Paying for childcare

People planning to retire will shortly have more freedom over their pension pots.

Pensions revolution - people planning to retire will shortly have more freedom over their pension pots. Cash Isa boost to £15000, and vouchers or tax-free help with childcare?

The Chancellor unveiled the biggest pensions revolution for almost a century. From April 2015, people will be able to take money out of their pension pots of any size with no restriction. No one will have to take an annuity on retirement. While certain rules are being relaxed from next week, just what should people due to make a decision about their retirement pot in the next few months need to consider? The Pensions Minister, Steve Webb and other pension experts join the programme. 

Cash is king.
Although cash isas have always been more popular than their riskier cousins stocks and Shares isas people have been able to put much less into them each year. But that restriction is being ended. From 1 July, the ISA limit will rise by several thousand pounds to £15,000 in 2014/15 and all of that can go into cash. But how easy will it be to swap bits of investments into cash? And vice versa?

VOUCHERS OR TAX-FREE?
The Government calls it 'Tax-free Child Care' but of course it is not. The new system to subsidise childcare announced this week begins on 1 September 2015 and will apply to children up to the age of 12 in registered childcare. Despite its name it is not really tax-free. First, it applies to non-taxpayers. Second, higher rate taxpayers only get 20% off - not 40%. And third it is not free of National Insurance. People with the current vouchers may prefer to stick with them. So what options should parents consider?

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