In April 2015 the rules about pensions are changing to allow anyone aged 55 or over to draw the whole of their pension fund in one lump sum. Until then stop-gap measures will still apply. However there are tax consequences to the new rules.

If you choose to take part or all of your pension fund you will be entitled to a tax-free pension commencement lump sum of a maximum of 25 % of your fund value. Anything over 25% of the fund value will be subject to income tax. If this means that you will go from being a basic rate taxpayer to a higher rate tax payer it is suggested that you spread the withdrawals over a period of years so that you stay in the lower tax band.

While the final details of the new rules are being sorted out the government have relaxed the current rules for anyone aged 60 or over. Since 27 March 2014 it has been possible for anyone aged 60 or over and with pension schemes that meet certain conditions to withdraw all of their pension savings. However the pension fund value must not be more than £10,000 and you can only withdraw up to three pension funds. If you withdraw three pension funds the individual funds can exceed the £10,000 maximum but the total of the three funds must not exceed £30,000 and only 25% of the funds would be tax-free.

The main question to ask now is whether, if you meet the conditions, you take the pension out or wait for the new rules. It is a matter of choice and personal circumstances. If you wait until after April 2015 you will be able to benefit from the governments free and impartial guidance on how to get the best from your pension savings. However this guidance will only be available at the time of retirement. If you have not retired and require personalised pensions advice it is best to speak to a financial advisor. If you decide to withdraw your pension now you could take advantage of Pension recycling. This means that you can take your pension savings and reinvest them up to the maximum allowance of £18,000 into a new pension scheme. The benefit of recycling is that you get tax-relief on the money that you re-invest and you would be able to withdraw all of it after April 2015 with 25% of it being tax-free. Even after deducting pension fund charges that will still give a good return on the reinvestment.