From April 2015 you will have the freedom to withdraw your entire pension fund, paying your marginal rate of income tax. Gone are the days when purchasing an annuity was a necessity! (This was a common misconception anyway).
But if you don't want to wait until then, there is a way you may be able to withdraw your entire Pension Pot before April 2015. This is under the Trivial Commutation rules and is a perfectly legal and accepted method of taking your Pension.
In recent changes to the budget, George Osborne raised the trivial commutation limit from £18,000 to £30,000. This means that if your total pension savings are below the £30,000 threshold, you can withdraw the fund as a taxable cash lump sum with 25% of it being exempt from tax.
These changes will affect anyone that saves into a personal or workplace pension plan, where payouts are determined by the performance of the fund rather than the final salary of the individual.
These new rules have the potential to be very advantageous for people with smaller Pension pots. These changes will mean different things for different people, some will benefit from this and some won't!
It's important to remember however, that withdrawing your entire pension may not be the right option for your personal situation; this is why obtaining professional pension advice is so important. Pensions can get very complicated - taking the wrong option could also result in negative financial consequences.
Please note: The budget brought about changes to several other rules that might allow you to withdraw your Pension before April 2015.