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What impact will the change in pension rules have on the economy?

Jonny Clark

6th April 2015

The Coalition's flagship pension reform has now come in to force, enabling hundreds of thousands of people of a pensionable age to start to take out a larger proportion or all of their accrued pension pot in a lump sum. The catch for those thinking of taking their money out in one go is that only the first 25% is tax free. The other significant downfall is that any money taken out will no longer count towards the annuity that pensioners have traditionally used to fund a regular fixed income during retirement.

George Osborne claims this is an important reform which will give a large number of people an immediate cash windfall to spend. So, could the new de-regulation of the pension market have a significant impact on the economy?

Jonny Clark

Jon Clark has been teaching economics and business studies for over 25 years primarily in the Further Education sector. Before joining tutor2u, he was a senior manager at South Cheshire College in Crewe.

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