You are here: Home - Retirement -

Pension reforms explained

Written by:
We summarise the key points of the government's far-reaching pension reforms.

From 27 March 2014 the government will:

• Cut the annual minimum income requirement for those applying to start flexible drawdown from £20,000 to £12,000.

• Raise the maximum yearly income allowed under the pension capped drawdown rules by 25%, from 120% to 150% of the Government Actuary’s Department rate to allow more flexibility for savers.

• Increase the size of the lump sum small pot five-fold to £10,000 and almost double the total pension savings you can take as a lump sum to £30,000

• Increase the amount small individual pension pots can be taken as a lump sum from £2,000 to £10,000. And increase the number of small personal pension pots that can be taken as a lump sum from two to three.

From April 2015:

• Everyone in a defined contribution (DC) scheme will be able to access their entire pension from age 55.

• The pension commencement lump sum (25% of the fund) will remain tax free and any income taken after this time can be taken without limit and taxed at the saver’s marginal rate.

• The change will be fully retrospective so anyone in drawdown can benefit from the change.

• No transfers will be allowed from public sector defined benefit (DB) schemes to DC pension schemes. Private sector DB schemes will be free to decide whether to adopt such controls.

• Lump sum death benefits – The government feels that the 55% tax rate on lump sum death benefits is too high. The consultation process for change will kick off now.

Key points from AJ Bell and Standard Life


There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The ISA offering 10% and tackling UK’s waste problem

Savers who would like to fund new green and social infrastructure can do so via the Abundance Innovative Finan...
The ISA offering 10% and tackling UK’s waste problem

Council tax ‘holiday’ means a cash windfall for millions

Millions of people will find an extra few hundred pounds in their account at the end of this month and next th...
Council tax ‘holiday’ means a cash windfall for millions

Three benefits of staggering your 25% tax-free pension lump sum

People aged 55+ can withdraw a 25% tax-free lump sum from their pension. But instead of taking this amount in...
Three benefits of staggering your 25% tax-free pension lump sum

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
London open: Insurers start to recover after Osborne’s annuities shake-up

UK stocks fell on Thursday morning, following a sell-off on US and Asian markets overnight, but insurers were making gains...