Those looking to take advantage of the proposed changes to pension rules could find that they need a bumper pension fund to do so. Some have estimated that retirees will have to have to accrued a pension fund in excess of £300,000 to benefit from the new rules. The new rules will allow retirees to keep their pension fund as drawdown instead of having to buy an annuity by the time they are 75. However to do this, they must prove they meet the minimum income requirement (MIR) which is rumoured to be around £10,000 per year.
Paul Macro from Towers Watson argues that….“…if the Government took a conservative approach, many people would have to use roughly the first £300,000 of their savings to provide a secure income before being able to access the rest of their money upfront.” This amount could change should rates for annuities improve or if the government were to become less cautious over the risk of people exhausting all their pension fund and then becoming reliant on state benefits.
With the typical pension fund in the UK being around £30,000, it does seem that these new rules are only really of importance to those with larger than average pension funds.
