Advisers have just six months to help clients approaching retirement understand the new pension changes, Mark Pearson, director of business development at national IFA Origen, has said.
Under the existing rules, only those with a guaranteed annual pension income of at least £12,000 can access flexible drawdown, but from April 2015 all those over the age of 55 will be able to draw down as much or as little as they need from their pension pots.
Mr Pearson said other changes included the introduction of the uncrystallised funds pension lump sum, which allows those over the age of 55 to withdraw some or all of their pension directly from their scheme.
There was also the introduction of the money purchase annual allowance, a new threshold – reduced from £40,000 to £10,000 – that restricts the amount of pension saving for those who have taken income from either of the above.
A fourth key change could be the removal of restriction on defined benefit transfers.
Mr Pearson said there were still uncertainties, adding: “The flexibility to draw your entire pension pot has not been extended to defined benefit pensions, although this is still to be consulted on.
“There is also the relaxation of rules on annuity payments and the removal of the 55 per cent charge on death.”
Adviser view
Nigel Green, founder and chief executive of international advisory firm the deVere Group, said: “These government plans are a reality check to get a robust, sound financial strategy in place sooner rather than later.”
