The Daily Mail had run a vociferous campaign against ‘annuity rip-offs’, so it celebrated the Budget changes to pensions, saying: ‘Millions will get freedom to use retirement cash how THEY want’.
The Chancellor said fundamental reforms would come in 2015 to give everyone the freedom to use their pension fund how they liked, so long as they paid tax on what they drew out once the 25% of fund tax free cash limit had been exceeded. In the meantime, he said people could take pension pots of up to £30,000 in cash rather than having to turn them into annuities, effective from March 27th. Of course, compulsory annuity purchase has been dead for some time now but the new proposed rules will make drawing down the funds much more flexible than under the current rules. You can’t get much more flexible than taking the entire fund in cash. Importantly there will be consultation to agree the detail of how all retirees will be given access to free, impartial face to face advice guaranteed by the product providers.