The majority of the changes will become effective on the 6th April 2015 and the tax consequences of these changes are contained in the Taxation of Pensions Bill which is currently passing through Parliament and maybe subject to further modification.
In practical terms the changes will allow full access to defined contribution pension schemes allowing the individual to choose exactly when and how much income they wish to take.
Further good news for annuities, if set up on a joint life basis, for example as spouse/civil partner will receive any guaranteed part of the annuity tax free on member’s death before aged 75. Unfortunately this change in legislation will not apply to company final salary schemes.
As reported there will be no tax applied on pension death benefits before the age of 75 for defined contribution schemes.
All this flexibility is fine but here is always a danger that your pension will run out of money, therefore careful planning and management will be essential. Pension funding has once again become very attractive as a tax deferment savings plan; investors should once again take full advantage but not before taking expert financial advice.