There will be a number of changes to the pension flexibility rules. These include making lump sum payable on serious ill-health tax free before age 75 and taxable at the individual’smarginal rate when paid at age 75 or more. It will be possible to convert dependants flexi- access drawdown accounts to nominees accounts when dependants reach the age of 23, thereby avoiding a 45% lump sum tax charge.
A trivial commutation lump sum payment will be allowed for defined contribution pensions in payment, where total pension savings would be under £30,000. Top-ups to fund dependants death benefits will be classed as authorised payments. Changes will also be made to the treatment of charity lump sum death benefits. The measures will take effect from the date of Royal Assent to Finance Bill 2016.