New pension changes come into effect
07 Apr 2015
As of 6 April, individuals aged over 55 have been given new pension freedom, allowing them to decide what to do with their savings.
The changes allow those entering retirement – around 320,000 individuals per year – to cash in their pension pots instead of having to buy an annuity. While an annuity offers a monthly income for life, the freedom to choose has been described by Chancellor George Osborne as a ‘permanent revolution’.
Mr Osborne said: ‘What it means is that people who have worked hard and saved hard can have access to their pensions savings.
‘Many people will have assumed they have to buy an annuity. That’s not the case anymore.’
Warnings have been issued to ensure pensioners do not fall foul of various pitfalls in the new system, and the Government’s Pension Wise service has also offered official advice. Pensions Minister Steve Webb said: ‘We want people to make informed choices. This isn’t a mad scramble rush to do something this morning’.
Ros Altmann, the Government’s business champion for older workers, advised people to leave their pension pots alone. She said: ‘There are huge tax benefits from having the money in the pension.
‘The idea is you can take your money out, not that you should take your money out.’