Pension changes come into effect

Rules on how savers can access their defined contribution pensions from age 55 have changed.

The new rules are designed to give savers greater freedom and flexibility over how they access their pension savings.

The main changes from 6 April 2015 are:

Lump sum payments

Savers can access up to 25% of their pension pot tax-free. This money can be taken as a one-off payment or in multiple amounts.

Flexi-access drawdown

There are now no rules of how much you can take from a drawdown fund each year. All drawdown payments are taxed as income.

Capped drawdown

No new capped drawdown or flexible drawdown funds can be set up from 6 April. Savers already in capped drawdown schemes can continue with their arrangement or convert their fund into a flexi-access drawdown fund.

Dr Yvonne Braun, director of long term savings strategy at the Association of British Insurers, said:

"Don't panic, don't rush and don't be tempted to dash for the cash without carefully considering your options.

"With the new pensions freedoms and flexibility comes responsibility, so the only sensible advice is to contact the free, impartial Pension Wise service who can explain what the changes could mean for you, and your options."