New UK regulations that come into effect on April 6th have led to Insurance giants Aegon, Aviva, Scottish Widows, Standard Life and Phoenix to announce that over-55s will now be allowed to dip into their pensions as and when they like, taking their 25pc tax-free lump sum as they go.
Currently most pension schemes don’t allow people to take small amounts of money, and the newly retired are forced to take their 25pc tax-free lump sum within 18 months of retiring. However, in his Budget in March last year, the Chancellor, George Osborne, announced a set of radical changes to allow pensioners greater freedom over how they draw their pension in retirement. The reforms, which take effect on April 6, mean that no one will have to buy an annuity, the product that allows savers to swap their pension fund for a guaranteed income in retirement. For the first time, people will be able to take their pension pots as cash.