People who have recently taken a tax-free lump sum from their defined contribution pension will get 18 months rather than six months to decide what they wish to do with the rest of their retirement savings.
This follows an announcement on 27 March that confirmed that the Government would act to ensure that people do not lose their right to a tax-free lump sum if they would rather use the new flexibility this year or next, instead of buying a lifetime annuity.
Under current tax rules, once a tax free lump sum has been taken, individuals have six months before they are required to make a decision regarding their pension, either by buying an annuity or entering into capped drawdown.
{desktop}{/desktop}{mobile}{/mobile}
Currently, if this is not done, the lump sum is then taxed at 55%. This extra time will allow people to make the right decision for their pension.
Exchequer Secretary to the Treasury David Gauke said: "We recognise that decisions people take regarding their pensions are important and take time.
"This extension to the decision making period will give people the opportunity to take full advantage of the new flexibilities introduced at the Budget.
"The Chancellor announced at Budget that by removing the effective requirement to buy an annuity, people will have greater flexibility in accessing their pensions.
"This means that people can choose how they access their defined contribution pension savings; for example they could take all their pension savings as a lump sum, draw them down over time, or buy an annuity."