Budget 2014 - Changes to Pensions and ISAs

The changes as of 27 th March 2014:
As a stepping stone to the widespread change outlined above there are a number of measures
introduced which act as a forerunner:
1. The treatment of smaller pension points (‘trivial’ pensions)
Prior to 27 th March 2014 the trivial pension rules allowed people (aged 60 or over) with less
than £2,000 in a pension plan to take this as a cash lump sum. This has now risen to £10,000.
This can now be done with a total of 3 pension pots, provided they are each valued at £10,000
or less.
This was an exception to the normal rules, where only 25% was available as a cash sum.
In addition to the rule above, people (aged 60 or over) whose combined value of all pensions
was £18,000 or less could take their savings as a cash sum (25% tax free, the balance taxed at
their marginal tax rate). This figure has now risen to £30,000.
2. The changes to drawdown
A drawdown pension allows income to be taken from a pension plan while the funds within the
plan remain invested. There are limits to the amount of income that can be ‘drawn’ each year.
Beneath these limits the individual can choose their income level in any particular year.
There are two forms of drawdown pension:
• capped drawdown
• flexible drawdown
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