Pension freedoms

Pension flexibilities introduced on 6 April 2015

Since 6 April 2015, individuals who have reached the normal minimum pension age (the earliest age at which most members can access their pension savings without incurring unauthorised-payment tax charges) have had greater flexibility in how they access their defined contribution (DC) pension savings, regardless of the value of their pension pot. The normal minimum pension age is currently 55 and will increase to 57 on 6 April 2028, subject to any protected pension age or other applicable exception, including ill-health. The available retirement options are as follows:

1. •

   they can buy an annuity—for more information, see Practice Notes: Annuities for pension lawyers and Guaranteed annuity rates (GARs)

2. •

   if the scheme permits it, they can:

   1. ◦

      take funds from their pension pot as a single lump sum or a series of lump sums. Ordinarily, 25% of each uncrystallised funds pension lump sum (UFPLS) is paid free of income tax and the balance is taxable at the member’s marginal rate. The tax-free amount is subject to the member’s available lump sum allowance and any applicable protection or transitional rules. For more information,...