Draft guidance has been published on the transitional changes around pension flexibility in the Finance Act 2014. These takes took effect from 27 March 2014 in advance of further changes to be made next year as we reported in the story “Government responds to Freedom and Choice in Pensions consultation”

Broadly, for an individual’s pension commencement lump sum (tax-free lump sum) to be paid tax-free they must, within certain time-limits, have a pension associated with the lump sum. The changes described in the guidance allow someone longer to decide how to access that pension. These special rules are temporary and thus it is necessary to take the pension commencement lump sum (“PCLS”) before 6 April 2015 and the associated pension before 6 October 2015 for these rules to apply.

Depending on how someone wants to access their remaining pension savings after taking their PCLS they may have to wait until further new rules take effect from 6 April 2015.

As also reported in the story “Government responds to Freedom and Choice in Pensions consultation”, draft guidance for 2015 is also published.