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Retirement

Budget 2014: Small pension pot rules eased

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
19/03/2014

The Chancellor has relaxed the rules on cashing in small pension pots, meaning savers now have more choice on how they access their retirement money.

Under previous ‘trivial commutation’ rules, 60-year olds could only take their pension pot as a lump sum at retirement if it was worth £2,000 or less or if their total pots amounted to £18,000 or less. They would have to buy an annuity if their savings exceeded this level.

However, today George Osborne raised that limit to £10,000.

The changes mean more people will be able to take their modest pension savings as a lump sum rather than a poor-value annuity.

The changes could affect up to 150,000 a year, according to Hargreaves Lansdown.

A recent review of the annuity market by the Financial Conduct Authority found there was less choice for investors with such small pots and it was harder for them to get value for money when it came to converting their savings into income.