The most talked about and biggest surprise in the Budget was the announcement on changes to pensions.
Under the current system three quarters of those retiring had to buy an annuity with only very small or very large pensions having flexibility.
From April 2015 the system for accessing defined contribution pensions at retirement will be….
Under the current tax system, people are charged 55% if they choose to withdraw all of their defined contribution pension savings at the point of retirement. This means the majority of people instead purchase an annuity and receive taxable income over the course of their retirement. Under the new system, an individual will be able to withdraw their savings at a time of their choosing subject to their marginal rate of income tax. The government anticipates that under these circumstances some people will choose to draw down their pension sooner in order to suit their personal situation. This will increase income tax revenue in the short to medium term.
…. Budget Report 2014
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