The Chancellor has announced that savers will get greater freedom over taking their tax-free lump sum from their pension pot – in a move already being described by some as turning pensions into bank accounts.

George Osborne has confirmed the plans to Parliament this afternoon, following reports this morning.

The government has published the Taxation of Pensions Bill, which will change the tax rules to allow people aged 55 and above to access their defined contribution pension as they wish from April next year.
Rather than taking out a single lump sum as is the case now, savers will be allowed to take multiple amounts.
The changes will mean that savers can dip into their pension pot when they want. Each time 25% of the payment they take out will be tax-free.

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Mr Osborne said: "People who have worked hard and saved all their lives should be free to choose what they do with their money, and that freedom is central to our long term economic plan.
"From next year they'll be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families tax free.
"For some people an annuity will be the right choice whereas others might want to take their whole tax free lump sum and convert the rest to drawdown.
"We've extended the choices even further by offering people the option of taking a number of smaller lump sums, instead of one single big lump sum.
The Budget 2014 reforms mean from April 2015 around 320,000 individuals retiring each year with defined contribution pension savings will be able to access them as they wish, subject to their marginal rate of tax, the Government estimated.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: "In theory it does mean that pensions could be used like a bank account, with investors dipping in to draw income at will."
Mr McPhail said the reforms could work in the following way:
· Investors could receive each monthly payment in the form of a 25% tax free payment, with the balance taxed under income tax rules
· It could also possibly mean investors drawing their tax free lump sum but deferring the (taxable) balance. This balance could then be passed on to beneficiaries on death and could potentially avoid any tax charge
· Pensions will be (in theory at least) supremely flexible.