Guernsey: George Osborne Gives Pension Savings A Dramatic Boost!
Last Updated: 20 March 2014

Christine Hallett of Carey Pensions UK comments on the UK budget changes announced on 19th March.

The seismic shift in UK policy towards pensions savings in George Osborne's budget is one other countries should seriously consider following.

In one move, the UK has made Pension savings dramatically more attractive by offering complete flexibility in drawing on your savings when you reach age 55. The tax incentives for saving in to a pension scheme still remain and this change means there's no longer onerous restrictions on drawing down your pension savings. The UK has also adopted more flexibility for smaller pension pots a welcome move by savers and pension administrators alike.

These changes take a whole host of negatives out of using Pensions for retirement saving and should help boost the amount people put aside for their older years. Of course the additional flexibility may mean some spend all their savings when they reach age 55 with little thought to their long term retirement needs, but the majority will surely be better off. Governments around the world are struggling with ageing populations and the burden this places on supporting people in their retirement years. It needs radical thought and George Osborne looks like he's made a significant attempt at being radical.

Flexibility around drawdown has of course existed in the UK for some years now where buying an Annuity hasn't been compulsory. No doubt many reading the budget news won't have realised this flexibility existed, SIPPs will continue to be an ideal vehicle for managing your pension through a flexible drawdown where a combination of certainty through Annuity purchase and investment to provide income may well be appropriate.

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