Pension savers given greater choices at retirement

Pension savers will be given more choice over how they receive the money they have saved in a pension at retirement under new plans outlined today by the government.

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by Chris Marshall on Jul 15, 2010 at 16:09

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Pension savers given greater choices at retirement

Pension savers will be given more choice over how they receive the money they have saved in a pension at retirement under new plans outlined today by the government.

As part of the government’s decision to remove the obligation to use a pension pot to buy an annuity by age 75 – which then provides a guaranteed income for life – it has set out two ways of receiving income at retirement.

The first, ‘capped drawdown’ allows individuals to choose how much money to take annually from their pension pot throughout their retirement, or whether to draw any income at all. This will be subject to a capped limit.

The second allows people to take more than this capped limit. ‘Flexible drawdown’ will allow people to take unlimited amounts from their pension pot. But they must be able to prove that they have enough money and will not run out and subsequently fall back on state aid.

The government says that the proposals mean that 'alternatively secured pensions', an alternative to an annuity suitable for some wealthy individiduals, will no longer exist.

The government is abolishing the age 75 obligation to buy an annuity in order to allow more flexibility for people who may want to leave some of their pensions savings invested or who may have alternative sources of income and want to delay buying an annuity.

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7 comments so far. Why not have your say?

How refreshing reward the savers.

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I'd like to know how much the government will deem to be enough to avoid falling back on state aid. That will be the crux of it. £50k? £100k? £500k? £1.5mn ?

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This sounds great, but I wont be cheering until I know all the details. Also for me and 20 years time what will be the rules? I see a continual changing pension environment, which will bring with it some pluses and minuses no doubt.

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Don't get excited this is for the Tories millionaire friends who need the money. The plebs on the other hand have had 10 per cent of their pension fund wiped out by the change from RPI to CPI on the spurious grounds this more accurately reflects the inflation rate faced by pensioners when all the evidence shows that it does not. Why should evidence get in the way?

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XXXXX I'm no Tory millionaire friend but thank goodness I don't have to give all my savings to an insurance company when I'm 75. There's only one person who knocked 10% off my pension fund and he's gone now, thankfully.

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Well said Alan. If xxxxx is entitled to an index linked pension then he is a lucky chap. The millions of us who have to provide for our own pensions have seen a good 50% or more wiped off what our pension funds forecast some years ago, with Brown's tax, artificially low interest / annuity rates and longer life expectancy.

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John robert

Jul 22, 2010 at 11:17

For goodness sake stop winging, all of you.

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