Pension Simplification

Other changes introduced by pension simplification: 

Early retirement age available from age 55* 

Full concurrency (i.e. being able to pay into any array of plans you wish), subject to the AA and the potential for carry forward) 

Wide investment flexibility 

Up to 25% tax-free cash. 

The ability to commute ‘small’ funds as a one-off lump sum as opposed to having to draw a regular income from age 55 (subject to part of the fund being taxed) 

Flexible options at retirement when deciding to take benefits such as Flexi-access Drawdown 

No need to ‘have to’ secure benefits at age 75 via an annuity 

In addition, pension freedom gives individuals further and greater flexibility to access their pension savings from age 55*.  
 
The changes included: 

To increase the flexibility of the drawdown rules by removing the maximum ‘cap’ on withdrawal and minimum income requirements for all new drawdown funds from 6 April 2015 

To enable those with ‘capped’ drawdown to convert to a new Flexi-access Drawdown fund once arranged with their scheme 

To enable pension schemes to make payments directly from pension savings with 25% taken tax-free, known as the Uncrystallised Fund Pension Lump Sum (UFPLS) option 

To remove restrictions on lifetime annuity payments 

To ensure that individuals do not exploit the new system to gain unintended tax advantages by introducing a reduced Annual Allowance of £10,000 for money purchase savings where the individual has flexibly accessed their savings 

To increase the maximum value and scope of trivial commutation lump sum death benefits. 

*From April 2028, you will have to be 57 before you can access your pension under the pension freedom rules  

Pensions are a long-term investment. You may get back less than you put in. Pensions can be and are subject to tax and regulatory change therefore the tax treatment of pension benefits can and may change in the future. 

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