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

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?