In brief
In yesterday's Budget the Chancellor announced radical
changes to pensions. The most radical one only directly applies to
defined contribution schemes or "money purchase"
schemes.
In more detail - the annuity requirement
The main change is that from 2015 individuals will have the
choice to take some or all of their pension saving as cash at any
age from 55 onwards. They will pay tax on this but only at their
marginal rate at the point of income. Carefully structured, drawing
from one fund could be combined with deferring another pension and
state pension to produce significant tax savings.
This removes one of the structural rules of UK pensions –
the requirement to use pension saving to buy an annuity. Over
the next year the Government will examine all the knock-on effects
and decide which ones it can tolerate. It has already flagged up
that it will ban most public sector workers from transferring their
final salary pensions to a DC scheme to take
