From today, major changes to pension rules are coming into force across the UK, affecting all those entering retirement.
It is no longer necessary for retirees to take out an annuity, which is the equivalent of a fixed income each year. Instead, they will be able to access their full pension pots as they please, giving them more control over their retirement savings.
Subject to income tax, new pensioners can withdraw any amount from their Defined Contribution (DC) scheme at any time. Additionally, those on Defined Benefits schemes will be able to transfer to DC instead.
Described by Chancellor George Osborne as a “revolution” for pensions, the rules apply to anyone aged 55 or over, and an estimated 540,000 people will be affected by today's changes.
The government has put in place a free guidance scheme to help people who are approaching retirement. Called Pension Wise, it is run by the Pensions Advisory Service.
Although the new rules only apply to those entering retirement, similar plans are also being drawn up for current pensioners.