Under new government proposals, due to come into effect in April 2015, you will be able to access your pension and use it in any way you prefer after you are 55.
You will be able to:
- take 25% of your pension fund tax free
- convert some or all of the rest into a regular retirement income by way of an annuity or
- withdraw the remaider of the funs in stages or as one lump sum – subject to tax at your highest rate.
You will also be offered free impatial face to face help on your choices and options.
Most people have used their pension funds to purchase an annuity, providing a regular income on their retirement. This option will still be available. The changes as described are being introduced to give you greater choice on how you use your pension fund. It is also intended to encourage more people to save for their retirement.
There are also some interim changes between now and April 2015:
If you are 60 or over and your total pension fund(s) – excluding your state pension entitlement, amount to £30,000 or less, you can now take the entire amount as a cash lump sum.
If you have a number of small pension funds of £10,000 or less, you can have three of these as a cash lump sum – even if your total pension savings are greater than £30,000.