Pensions _ No Good News On Tax Free Cash

In an attempt to close the savings gap in the UK, speculation has been rife regarding the rules on taking tax-free cash at retirement and whether or not they are to be changed.  There has been much unrest in the industry recently with thoughts that the Government will force all retirees to buy an income for life with the whole of their pension fund.  This differs to current regulations, which allow up to 25% of the fund of a personal/stakeholder pension plan to be taken in cash.  This way, only around 75% is used to purchase an income for life.  Industry commentators have argued that if the tax-free cash incentive is taken away, so have the benefits of saving in a pension.  In a reply to the National Association of Pension Funds last week, Ruth Kelly for the Treasury said, "any substantive comment in response would reduce the Government's freedom to consider policy options and make policy decisions in the future".  She also said that reports of cutting or removing the option for tax-free cash were "pure speculation".  To learn more about pensions visit the Pensions Adviser.com.  Search the archive for Pensions news.