Pension flexibility: new options from 6 April 2015

12 February 2015

HMRC has published guidance on the changes to defined contribution pensions savings access, including details on how the options are to be taxed.

From 6 April 2015, from age 55, individuals can access as much of their defined contributions pension savings as they wish. There will be three main options but any combination of these can be used.

Lifetime annuity

As you can now, you will be able to use some or all of your funds to buy an annuity which will be payable at least for the rest of your life. When you buy an annuity you can take a tax free lump sum of up to 25% of your pension pot at the same time.

Flexi-access drawdown

As you can now, you will be able to put funds into drawdown. From 6 April 2015 there will be no limits on how much or how little you can take from your drawdown fund each year. When you put funds into drawdown you can take a tax free lump sum of up to 25% of your pension pot at the same time.

Lump sum payment

From 6 April 2015 you can take money direct from your pension pot without having to buy an annuity or put the money into drawdown, and 25% of this sum will be tax free. This is called an ‘uncrystallised funds pension lump sum’ (UFPLS).

Visit GOV.UK for full details.