Pensions shake-up expected to spark flurry of activity
The biggest shake-up to happen to pensions in decades will be put into action next year, when thousands of savers are handed new powers to spend their retirement cash on what they want, when they want to.
A wave of government reforms, which are set to come into force from April and are expected to spark a flurry of activity, will give older people much greater freedom and choice over how they cash in their pension pots.
They will also mean that fewer people are herded towards converting their defined contribution (DC) pension into a lifetime income called an annuity.
Free, impartial guidance will also be offered, to help the 320,000 people who retire each year with a DC pension decide what they should do with their money.
New measures are also planned from next spring which aim to weed out any "high or needless'' fees with the potential to eat away at people's pension savings and leave them with a disappointingly small pot when they come to retire.
The over-arching aim of the measures, which were unveiled in a string of announcements across the year, is to boost confidence in retirement saving and help people to build up bigger nest eggs, at a time when millions of people are being automatically placed into workplace pension schemes.
As many as nine million people are eventually expected to be newly saving or saving more as automatic enrolment is rolled out in order to head off an old age savings crisis amid fears that people are living for longer but not putting enough money aside for their later years.
Pensions Minister Steve Webb said: "Our reforms represent some of the biggest changes to pensions in more than half a century; April 2015 is the start of a new pensions culture.
"I believe that it is right that people have the power to make their own decisions about how they spend their money, and clear impartial guidance will be in place so people have the help they need to take advantage of these new freedoms.
"We are taking strong action to restore confidence in pensions by capping charges, banning hidden costs and putting new standards in place to ensure everyone saving in workplace pensions gets the best possible value for money," he added.