Relaxed pensions rules: Guide to what they mean to you

Video: Simon Read finds out what we need to know about the new world of retirement saving

(The Independent)

From next April the pension rules are being relaxed so that people are no longer forced to buy an annuity with their retirement savings.

But what do the rules mean for us all and what should we be doing now?

The change – which the Chancellor George Osborne described as "the most far-reaching reform to the taxation of pensions since the regime was introduced in 1921" – will come into effect from April 2015.

The new rules will mean that savers will be able to get the whole of their pension at any time after the age of 55. You'll still be able to buy an annuity after that date, of course– it's just that you won't have to. What can you do with your money? It’s up to you.

In fact Steve Webb, the coalition's pension minister, suggested that retirees could even spend their cash on a Lamborghini. That’s not as silly as it sounds. It neatly sums up the profound change in pension planning that the Budget changes have put into effect.

The key change is you will be able to decide for yourself what to do with your pension nest egg. No longer will you be forced to buy an annuity. Instead you will be allowed to use the cash in any way you like, although you will still have to pay tax on it when you take it out of your pension pot, apart from the first 25 per cent.

The Independent’s personal finance editor Simon Read talks to pensions expert Alan Higham, head of retirement savings at Fidelity Worldwide Investments, to find out what we need to know about the new world of retirement saving.