Warren Shute is a chartered financial planner with Lexington Wealth Management. Contact him on 01793 771093 or warren@lexingtonwealth.co.uk

Q There have been a lot of articles about how to get money out of pensions from next April. What has changed since the Budget set this out earlier this year?

A From April 2015, no matter how much you decide to take out from your pension after retirement, withdrawals will be treated as income; the amount of tax you will pay on what you withdraw will depend on the amount of other income you have in that year. You’ll be able to access 25% of your pot without paying any tax, as you can now. This applies to defined contribution pensions, plans where your money is invested in fund(s) and the amount you get when you retire depends on how much has been paid in, charges, performance and annuity rates.

In July, it was announced this flexibility will now be extended to defined benefit pensions (final salary; these typically promise a pension income in retirement which is linked to your salary). In the Budget, George Osborne also announced the intention to offer free and impartial guidance to assist people with the complex decisions they may face. In July more detail was given; the service will be available online, by phone or face to face and your pension provider will have to tell you how to access it.

Another announcement in July confirmed that the earliest age when you can take your pension and access this flexibility will increase from 55 to 57 in 2028. Also to transfer from a defined benefit scheme, advice will have to be obtained from a registered financial adviser.

Annuities will remain the right choice for many at retirement as we know that retirees often value the security and certainty that an annuity provides. The government does, however, intend to change the current rules in order to allow new annuity products that can be tailored to fit needs of people in retirement. For example, allowing higher annuity payments in the early years which reduce once an individual becomes eligible for the state pension, or allowing lump sums to be withdrawn in later years, perhaps to pay for long term care.