Asked by: Brendan Clarke-Smith (Conservative - Bassetlaw)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of increasing the upper limit of lump sum pension withdrawals to above the £30,000 limit set out in the Pension Schemes Act 2015.
Answered by John Glen
The pensions regime has various features to ensure that pension scheme members are protected.
The Pension Schemes Act 2015 introduced a requirement for members of pension schemes with safeguarded benefits, such as defined benefit schemes or those with a guaranteed annuity rate, to take independent financial advice before accessing their pension pot flexibly, where the total value of the member’s benefits exceeds £30,000. This is because these schemes offer a high level of security and, in some cases, valuable guarantees that should not be relinquished without fully understanding the risks of doing so. Therefore, it is important that consumers get suitable advice to ensure that the implications are clear before proceeding with a decision to transfer.
Separately, trivial commutation rules allow individuals to access their pension as a lump sum if they are at least 55 years old (or retiring at an earlier age because of ill-health) and the total value of their rights in registered pension schemes is less than £30,000.
The Government keeps all policies under review. Any changes would be announced in the usual way.