In response to the Chancellor's Budget announcement, Ian Hartnell, Head of Employee Benefits, at business and financial adviser Grant Thornton UK LLP, commented:
“Significant new measures were announced in order to provide individuals with greater freedom to access their defined contribution pension savings covering virtually all pensions other than final salary plans. In addition, changes introduced from 27 March 2014 will allow more small pots to be taken as a lump sum and give greater flexibility under income drawdown.
“The Government is consulting on amending the tax rules to remove the existing constraints over what may be done with savings in a defined contribution pension pot. These changes are intended to take effect from April 2015, and will give savers over age 55 the choice of whether to purchase an annuity, make a full withdrawal or, alternatively, consider one of the other products available on the market. What's more, the current rate of 55% for full withdrawals will be reduced under the new flexible drawdown plan, and will instead be taxed at marginal income tax rates.
“The increased flexibility is welcome and will allow people to take control of their own finances like they can in other countries, this combined with more generous ISA allowances and a reduced rate of tax on some savings makes for a society that is empowered to control its future.”