A change in the Finance Bill allowing some people to take more of their pension benefits as a tax-free lump sum represents a "small step in the right direction to true simplification", says Standard Life.
The simplification means pension savers will not have had to contribute to their pension scheme after A-Day to gain protection against tax if they qualify for a tax-free lump sum greater than the standard 25% of pension benefits.
Previously, people with a greater entitlement could only receive an additional 25% tax-free lump sum of any money built up after A-Day if they paid at least £1 into the scheme after April 2006.
Andrew Tully, senior pensions policy manager at Standard Life, says: “This change will allow up to one million people, especially those who left schemes before A-Day, to take more of their benefits as a lump sum.
"It will especially benefit those people who were not able to pay additional contributions into old pre A-Day arrangements, for example members of final salary schemes.
“The simple pension rules introduced in 2006 have already become too complicated, although this change is a small step in the right direction to true simplification.”
The Government will backdate the change to 6 April 2006 and savers can use it immediately, although it will not become law until late July.
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