New pension rules used by 60,000 people

http://www.bbc.co.uk/news/business-33150066

Version 0 of 1.

About 60,000 people have used new pension rules designed to give greater financial freedom in retirement, Chancellor George Osborne has said.

He told MPs in the Commons that more than £1bn had already been transferred out of pensions.

In theory, the new rules give pensioners the ability to withdraw money from their pension pots to do with as they wish.

But some pension firms are not offering full freedom to their customers.

Under the government changes introduced in April, those over the age of 55 have the ability to withdraw as much money as they like from their pension savings, subject to income tax.

However, some companies are only offering limited freedom, while others are charging hundreds of pounds for advice.

But Mr Osborne said the number of people who had taken advantage of the new rules was testament to their success.

"We on this side of the House believe we should trust people who have worked hard and saved hard with those savings in retirement," he said.

He acknowledged that "we have got to make sure people get the best advice, that the market responds, the companies up their game in helping customers make use of these freedoms and we will be watching these things very carefully".

Significant reform

One of the main changes under the new rules means pensioners are no longer forced to buy an annuity.

"Whilst the number of people taking money from their pensions has not significantly increased, the way they are doing so has, with less than one in 10 of people currently choosing to buy an annuity, compared to eight or nine in 10 only a couple of years ago," said Tom McPhail at Hargreaves Lansdown.

"This is a reform of equal magnitude to the Right to Buy council house sales revolution of the 1980s; in the same way that Margaret Thatcher introduced millions of people to home ownership, George Osborne is now introducing millions of people to pension ownership."

Pension changes 2015