Finance Bill promises more control over pension funds

New legislation to be introduced in the Finance Bill 2011 will remove pension tax rules that currently mean members of defined contribution pension schemes are forced to buy an annuity by the age of 75.

The new rules, which will take effect from 6th April 2011, allow the decision to be deferred indefinitely and also remove the age 75 ceiling from most lump sums.

In addition, those who can prove they have a lifetime pension income of at least £20,000 a year (including state pension) will be able to draw down funds from their pension pots, without any cap on the withdrawals they may make.

With annuity rates having plummeted during the economic downturn the new rules should prove popular, particularly for those who can show they have a minimum annual lifetime pension income of at least £20,000 and can enjoy the flexibility of a drawdown pension arrangement.

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