Bank of Scotland urges A-day action

The Bank of Scotland has urged investors to make the most of their tax free lump sum when new rules come into force next year.

From April 6th 2006- “A-Day”- investors will be able will be able to take up to a quarter of their pension fund as a tax-free cash lump sum.

With annuity rates at a relatively low level, the ability to take up to 25 per cent of a pension fund as cash could give future pensioners the ability to increase their income through re-investment, claims the Bank of Scotland.

Research conducted on behalf of the bank revealed that almost one in two of those who have yet to retire are not planning to take advantage of A-Day.

The figures also show that of those in the pre-retirement years aged 55—64, who are perhaps more focused on retirement issues, one in three has no inclination to take out the tax-free lump sum.

As a result, the Bank of Scotland have issued a call for investors to consider taking advantage of the new rules, which enable them to cash in on other investment opportunities.

Alan Jones, head of Bank of Scotland Investment Service, said: "A-Day will bring about a number of significant changes to pension rules and it is essential that all those with pension funds are aware of how they personally will be affected.

“Some people may find that they currently have a pension that entitles them to take more than a 25 per cent tax-free lump sum and they need to take action now to protect this benefit.

“To maximise retirement income people need to consider all their investment options and take professional advice when necessary."