More than 400,000 people are set to benefit from the governments pension changes, some of which took effect today, the Treasury has claimed.
Setting out more detail of the radical pension reform announced in last week’s Budget, the department confirmed that people who have recently taken a tax-free lump sum from their defined contribution pension would be given more time to decide what they wish to do with the rest of their retirement savings.
Current rules, which require people who take up to 25% of their pension pot as lump sum to 'secure an income' (usually an annuity) within six months, are also being changed. The government intends to include legislation in the Finance Bill to ensure people do not lose their right to a tax-free lump sum if they intend to use the new flexibilities this year or next year.
Chancellor George Osborne said: 'From today, over 400,000 hardworking people will have new choices about how to invest or spend their hard-earned retirement savings.
'The pensions reforms in my Budget have struck a chord with many. The reaction to the Budget reminds us all of a simple truth: when people are given more choice over their own lives they warmly welcome it.'
Meanwhile, the Association of British Insurers issued a call for greater clarity on the rules on whether tax-free lump sums can be reversed for those who have just annuitised.
It said it was 'wholly unacceptable' that a week after the Budget the Treasury had still not clarified the rules.