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Even more pension freedoms on the way?

What are the pension freedoms?

In April 2015 the government changed the ways you can access your pension fund. These changes, known as 'pension freedoms', are available to anyone aged 55 and over with a personal pension.

One of the fundamental changes is the freedom regarding how you can access your pension funds. There are a number of options and some can be combined:

What further pension changes are being proposed?

If you are already receiving an annuity income, you may have the opportunity, from April 2017, to 'sell' the plan in exchange for a lump sum, under proposals announced by the government in March 2015. The proposals are intended to give you greater flexibility on how you choose to access your pension funds.

If you decide to sell your annuity you will be able to have the lump sum:

  • paid to you
  • paid directly into a 'flexi-access drawdown' plan (giving you the option to take an 'flexible income' from your pension pot, so you are able to change the amount you regularly receive, or take cash sums)
  • paid to an alternative annuity provider to buy a replacement annuity.

However, selling your annuity will only be possible if your annuity provider agrees and if you can find a willing buyer. Not all annuity providers will agree to this. Medical evidence will normally be necessary, and there may be an associated fee for this and other administrative tasks. If the cash sum is paid to you, it will be subject to income tax.

The cash sum will depend on many factors, including your age, the amount of your current annuity, your state of health and current interest rates.

The option that's right for you will ultimately depend on your individual circumstances. This reiterates the importance of seeking suitable financial advice, both for those who may want to consider selling their annuity, and for those who haven't yet decided how they'll secure an income from their pension plans.

If you'd like to discuss any other aspect of your personal or professional finances with your local Financial Consultant please call us on 0800 092 1990.

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