The lowdown on the landmark pension liberalisations

For once, George Osborne’s red briefcase contained a surprise.

In what was a complete shock to the media and the industry alike, the chancellor announced a swathe of wholesale reforms in 2014’s Budget on 19 March.


For the first time, people over the age of 55 will be able to access their defined contribution savings however they want when they retire.

The changes are set to be introduced on 6 April 2015.

The industry has heralded it as the first time that savers will be able to take their savings however they want after the age of 55, without the need to buy an annuity.

There are a number of caveats, however. Although savers could theoretically take their whole pension pot as a lump sum at the age of 55, most would face a big tax bill if they decided to do so.

There is also little consensus about what choices savers will make under this liberal new regime.

Many experts predict a rush to cash when the first tranche of savers retire. However, they expect that eventually, savers will take more of an interest in other ways to access the money over the course of retirement. For instance, future savers may choose to keep their pension invested and access it over time through income drawdown.

One thing we know for sure is that all savers will be offered impartial guidance on their choices at the point when they can take out their money with Pensionwise, the government’s new service.

But there are a lot of things we don’t know yet for sure. In the past, income drawdown has been the preserve of those with the biggest pension pots. But now, asset managers are developing new solutions for a more mainstream audience.

We also don’t know how many people will take up the offer of free, impartial advice through Pensionwise and how many will go it alone.

Pensions companies, from administrators to asset managers, have protested that they haven’t had enough time to adapt to the changes in time to be ready to meet savers’ demand in April 2015.

All of these subjects – and many more – will be addressed in Pensions Insight’s special series of “50 days…” comment pieces.

Join the discussion by leaving us your comments below, or by Tweeting using the hashtag #PI50days.