A Budget full of pension surprises

Commenting on the surprising pension outcomes of today’s Budget speech, which the Chancellor described as the most far reaching reform to the taxation of pensions since the regime was introduced in 1921, Malcolm McLean says:

“Rather than further tinkering with the tax-relief allowances, the Chancellor has clearly strived to think radically about the need for greater flexibility and consumer choice in redrawing the pension rules.

“These changes could have far reaching effects, particularly in relation to annuity purchase and a big increase in the use of income drawdown.  The rise in the trivial commutation limits from £18,000 to £30,000 overall and for three ‘stranded pots’ instead of two, increased from £2,000 to £10,000 is much higher than anyone anticipated ahead of the Budget.

“The full implications of the changes will no doubt become clearer over the next few days, but initial reaction has to be extremely favourable.”