Thank Mr Osborne, its been a long time coming but an end to being forced to buy an annuity is coming….
From April 2015, pensioners will have the freedom to cash in as much or as little of their pension pot as they want, removing the need to buy an annuity.
We will now have the choice of taking a lumpsum, drawdown over time or buy an annuity.
The news wasn’t good for Life Insurance Companies who saw £4.4m wiped off their value yesterday.
If you do want to buy an annuity you be able to get free independent advice.
There will also be a new NS&I Pensioner Bond savings scheme to be available from January to all people over 65, paying interest rates of 2.8% for one-year bonds and 4% for three-year bonds.
From 27th March 2014 small penion pots can be cashed in, the ABI say that 25% of annuity sales related to pension pots of less that £10,000.
“Savers with pension pots of less than £30,000 can now take this out as cash, in what is a welcome lifeline for savers with small pension pots,” says David Macmillan, managing director at life and pensions provider Aegon UK.
There are still rules and the changes apply to Defined Contribution Schemes not Defined Benefit Schemes but this is a massive change in pension rules.