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| Pension savers set to get more flexibility | |
| (about 2 hours later) | |
| Ministers are preparing to announce changes to the rules on pensions that they say will give savers more freedom. | Ministers are preparing to announce changes to the rules on pensions that they say will give savers more freedom. |
| From April, there will be no obligation to buy an annuity from an insurance company with money saved in a pension. | From April, there will be no obligation to buy an annuity from an insurance company with money saved in a pension. |
| More flexible options will include continued investment or moving to a process called "income draw-down". | More flexible options will include continued investment or moving to a process called "income draw-down". |
| But it is thought that a limit will still be imposed on the amount of money a pensioner can take from their fund at any one time. | But it is thought that a limit will still be imposed on the amount of money a pensioner can take from their fund at any one time. |
| The proposed law will, as promised in the June emergency Budget, remove the effective obligation to buy an annuity at age 75. | The proposed law will, as promised in the June emergency Budget, remove the effective obligation to buy an annuity at age 75. |
| However, the new law will stop people spending all their pension savings and then falling back on the state. | However, the new law will stop people spending all their pension savings and then falling back on the state. |
| "Those with large pension funds and other sources of income... are likely to benefit most from any enhanced flexibility," said George Bull of accountants Baker Tilly. | "Those with large pension funds and other sources of income... are likely to benefit most from any enhanced flexibility," said George Bull of accountants Baker Tilly. |
| "Most contributors are still likely to opt for an annuity which will more or less provide a guaranteed income for life," he added. | "Most contributors are still likely to opt for an annuity which will more or less provide a guaranteed income for life," he added. |
| The new pension legislation will form part of the 2011 Finance Bill. | The new pension legislation will form part of the 2011 Finance Bill. |
| "The new rules will mean that you won't need to buy an annuity from a life insurance company, you can just drain your pension savings directly instead," said annuity expert Billy Burrows. | "The new rules will mean that you won't need to buy an annuity from a life insurance company, you can just drain your pension savings directly instead," said annuity expert Billy Burrows. |
| "However, the government intends to increase the tax rate from 35% to 55% on any lump sum left over to your inheritors from this pension pot when you die." | "However, the government intends to increase the tax rate from 35% to 55% on any lump sum left over to your inheritors from this pension pot when you die." |