There has been much speculation with the proposed changes to pensions as to whether people retiring from company pensions will still be able to take tax-free lump sums.
Good news seems to be on the cards following EU legislation and it looks like lump sums will stay available. The Economic and Monetary Affairs Committee had voted to change the Occupational Pensions Directive but the vice-chairman, Scottish MEP John Purvis, said the changes looked like not proceeding. The Association of British Insurers has been lobbying to get the MEP's to change their mind.
Our View:
Being able to take a tax free cash lump sum when you retire appeals to most people, especially if they want to pay off their mortgage, go on holiday or buy a holiday home. Removal of this incentive will make people think twice about saving into pensions. This is not what the Government wants.