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Freedom and Choice in Pensions – Radical Changes

By July 25, 2014February 12th, 2019No Comments

Following George Osborne’s radical budget announcements in March, there has been huge coverage in the press of the new ‘freedoms’ allowed to pension scheme members, enabling a much more flexible way for people to ‘unlock’ their pension pots.

On Monday this week he set out how the system will work in practice.

Over the coming weeks and months we will be looking further at how the changes will provide opportunities for our clients.

Here’s our top 10 of the main changes to pensions that will apply from April 2015:

  • Members of Defined Contributions (DC) schemes can take out all their money when they reach the age of 55 (subject to tax) and spend it as they wish.


  • Transfers from private Defined Benefit Schemes (Final Salary) must be allowed – but only after professional advice from an FCA authorised firm like Cullen Wealth.


  • Transfers from unfunded public sector Defined Benefit Schemes will not be allowed.


  • Further consultation will occur with trustees of Defined Benefit Schemes to see if the new freedoms applying to DC schemes could be accommodated without the need for a transfer.


  • Every individual attaining normal retirement age will be entitled to receive a free guidance guarantee (the guidance guarantee cannot provide advice and in many cases individuals will still need to receive personalised advice from a financial advisory firm such as Cullen Wealth).


  • A change in legislation will allow annuities to have more flexibility, such as decreases in income after a set period, additional lump sums and guarantee periods which extend beyond 10 years from when the annuity has been taken. The changes are designed to make annuities more attractive.


  • A new £10,000 Annual Allowance (maximum contribution) will apply after a client accesses flexibility, to counter abuse of the new freedom (in contrast to those that have not accessed their pension, they will enjoy an annual allowance of £40,000).


  • Individuals already in flexible drawdown were not allowed to make future contributions to pensions; they will now receive an annual allowance of £10,000.


  • The tax charge which can be applied on death in drawdown will come down from 55%. A new rate of tax is to be confirmed in the Autumn Statement 2014.


  •  Normal minimum pension age is going up to 57 from 2028.

We very much welcome these measures, allowing for greater choice and freedom.  We believe that the new rules bring great opportunity to pension holders and will be pleased to be contacted by anyone seeking help and advice in this area.

Please email or telephone 0161 975 6700.