From 6 April 2015 individuals have greater flexibility over how they can access their defined contribution pension arrangements. Individuals are now able to take all of their pension savings as a lump sum, draw them down gradually over time or buy an annuity (or a combination of these). 25% of the fund can be taken tax free, as previously, while the remainder is subject to income tax.
This note looks at the implications for defined benefit pension schemes. We hope that the information will be useful to employers in helping them formulate a benefits strategy which not only fits with its’ business objectives, but will provide favourable outcomes for employees and pension scheme trustees.