Retirement
Retirees offered extra pension decision-making time
By extending the decision-making period from six months to 18 months, the Treasury said retirees “will not be put at a disadvantage should they wish to wait to access their pension savings more flexibly”.
Under current tax rules, once a tax free lump sum has been taken, individuals have six months before they are required to make a decision regarding their pension, either by buying an annuity or entering into capped drawdown.
Currently, if this is not done, the lump sum is then taxed at 55%.
The move follows radical pension reforms announced in last month’s Budget, including removing the need for retirees to buy an annuity.
Exchequer Secretary to the Treasury, David Gauke, said: “At Budget the government announced the most fundamental change in the way that people access their pension in almost a century, ensuring that over 400,000 people who have worked and saved hard will be able to access their retirement savings more flexibly.
“However, we recognise that decisions people take regarding their pensions are important and take time. This extension to the decision making period will give people the opportunity to take full advantage of the new flexibilities introduced at the Budget.”
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