November 14 2014.

The government has now published the Taxation of Pensions Bill which will change the tax rules to allow individuals aged 55 and above to access their defined contribution pension as they wish from April next year. As part of the bill the government is proposing to change the rules on taking pensions as a lump sum to allow individuals to take a series of lump sums instead of just one.

Currently, those that want to take their pension as a lump sum would take 25 per cent of their pot tax free and then place the other 75 per cent in a drawdown account. Any money they take out of their drawdown account will be taxed at their marginal rate.

Under the new tax rules, individuals will have the flexibility of taking a series of lump sums from their pension fund, with 25 per cent of each payment tax free and 75 per cent taxed at their marginal rate, without having to enter into a drawdown policy.

From April 2015 individuals will have the freedom to pass on their unused defined contribution pension to any nominated beneficiary when they die, rather than paying the 55 per cent tax charge which currently applies to pensions passed on at death.

Further details can be found HERE.