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First stage of pension overhaul begins


The first stage of the pension overhaul which was announced by Chancellor George Osborne in his Budget 2014 speech has begun.

Pensioners will now have greater access to their pension pots, as they will be able to take up to a maximum of £30,000 from their pension as a lump sum, up from £18,000.

The entire overhaul will come into effect as of April 2015, when pensioners will be given “full-flexibility” over their pensions, meaning they are free to do whatever they like with their money.

However, some experts have warned that some retirees may make poor decisions with their money due to a lack of adequate advice. It is feared that some may spend their money frivolously, and not have enough to last them the rest of their lives.

As of today:

1.Those aged 60 and over can take a maximum £30,000 from their pension savings as a lump sum. Previously this was set at £18,000.

2. The maximum amount an individual can take as an income from their pension has been increased. This arrangement is called ‘capped drawdown’.

3. If you have a guaranteed pension income of £12,000 or more, you can ‘draw down’ an unlimited amount from your pension pot.

4. Pension pots of less than £10,000 can be taken as cash, up from £2,000. As long as you are aged 60 or over.

As of April 2015:

1. Around 400,000 people will have more flexibility in accessing their pension pots.

2. Retirees will have complete control over their pension savings, and how it is spent or invested.

Time constraints

The changes to pensions have drawn intense criticism from the insurance industry, especially as some claim that Chancellor George Osborne has only given them only 10 days to prepare for the changes.

Huw Evans, of the Association of British Insurers (ABI), made clear his concern over the new rules for those who bought an annuity just before the changes were put in place.

He said “Insurers remain committed to working with each other closely to help customers who wish to exercise their 'cooling-off' rights but needs the government to do its part to recognise the urgency of clarifying the post-Budget situation it has created."

Joanne Segars, Chief Executive of the National Association of Pension Funds (NAPF) also commented on the size of the task of putting a ‘guarantee of guidance’ in place before the overhaul before April 2015. She claimed that people needed help and support when making such major decisions about their financial future and that a ‘guarantee of guidance’ would not be put in place in time for those making decisions based on the new temporary rules over the next 12 months.

Need advice?

We highly recommended that any new retirees do make sure they seek out expert advice before making any major decisions over financing their retirement.

At we have a team of qualified financial advisers who are happy to provide advice on planning your finances for retirement.

You can contact us by simply asking a question online, or by calling 0800 092 1245.

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