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HMRC has updated its Tax Information and Impact Note on the new flexible arrangements for accessing funds from money purchase schemes from age 55. HMRC summarises the changes as follows, in that, starting from April 2015, it will

• allow all of the funds in a money purchase arrangement to be taken as an authorised taxed lump sum, removing the higher unauthorised payment tax charges
• increase the flexibility of the income drawdown rules by removing the maximum ‘cap’ on withdrawal and minimum income requirements for all new drawdown funds from 6 April 2015
• enable those with ‘capped’ drawdown to convert to a new drawdown fund once arranged with their scheme should they wish
• enable pension schemes to make payments directly from pension savings with 25 per cent taken tax-free (instead of a tax-free lump sum)
• introduce a limited right for scheme trustees and managers to override their scheme’s rules to pay flexible pensions from money purchase pension savings
• remove some restrictions on lifetime annuity payments
• ensure that individuals do not exploit the new system to gain unintended tax advantages by introducing a reduced annual allowance for money purchase savings where the individual has flexibly accessed their savings
• increase the maximum value and scope of trivial commutation lump sum death benefits
• provide new information requirements to ensure that individuals who have flexibly accessed their pension savings are aware of the tax consequences of doing so
• reduce certain tax charges that apply to death benefits
• enable persons other than dependants to inherit unused drawdown funds and provide that where the death occurred before age 75, lump sum death benefits and drawdown pension from these funds can be paid tax free, subject to the member having sufficient available lifetime allowance
• make changes to the rules for UK individuals who receive UK tax relief for contributions to non-UK pension schemes, so that the flexibilities and restrictions to relief apply equally to them