The Government plans to bring even greater flexibility into the pension system from April 2015. In effect an individual will be able to choose what they want to do with their defined contribution pension fund.
- If they want to draw out all of the fund on retirement they will be able to do so. The tax free element will be 25% of the sum and the balance will be taxed as income in that year.
- If they wish to buy an annuity they will be able to do so.
- If they wish to opt for a drawdown arrangement they will be able to do this without any restriction either in the form of a cap or a minimum income limit.
These changes will be subject to a consultation and we will keep you informed of developments.
Internet link: Pensions explained