The Government has finalised new rules that will allow millions of people over the age of 50, to take tax-free lump sums out of their pensions without changing employer. Under existing rules, someone can only draw out his tax-free lump sum if they retire from the job, which means cashing in all their pensions, and stopping paying into them. This involves taking out an annuity or going into an income drawdown plan where a certain amount is taken each year.
Our view:
As part of all the new pension simplification rules that start on 6th April 2006, this is welcome news.