May 2015 Pensions are Changing

From 6 April 2015, a range of new pension flexibilities were introduced following the announcement in the Budget 2014. In effect, an individual will be able to choose what they want to do with their defined contribution pension fund.

From age 55 years they will be able to access their pension pot without limitation by

Taking the whole pot as a lump sum

Taking a number of lump sums out of their pot

Opting for a flexible drawdown arrangement where lump sums, or regular payments, can be drawn down or

Purchasing an annuity


The Department of Works & Pensions (DWP) has issued advice on how an occupational pension, and any money take from it, will be treated in the calculation of entitlement to employment and support allowance (income-related), housing benefit, income support, jobseekers allowance (income-based), pension credit and universal credit, including


People who have reached the qualifying age for pension credit are expected to use their pension(s) to help support themselves. If they choose not to buy an annuity after reaching the qualifying age for pension credit, an amount of notional income will be taken into account when their benefit is worked out. Notional income (in this case) is an amount equivalent to the income they would have received if they had bought an annuity. If they take an income from their pension pot, the amount which will be taken into account when assessing benefit will be the higher of the actual income or notional income. Cash lump sums will be taken into account as capital


From 12 October 2015 a scheme will be introduced to allow pensioners to top up their additional state pension (also known as SERPS or S2P, which is paid along with basic pension). This new scheme will be called state pension top up.

It will be available to all pensioners who reach state pension age before the introduction of the new state pension on 6 April 2016. The scheme will be open until 5 April 2017.

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