Currently, people over the age of 55 can take 25 per cent, without tax, in a larger sum.

The new rules will mean that people can access as little or as much as they want, and for each withdrawal the first 25 per cent will be tax-free.

Chancellor of the Exchequer George Osborne (as reported in ITV) said: “People who have worked hard and saved all their lives should be free to choose what they do with their money, and that freedom is central to our long term economic plan.

“From next year they’ll be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families tax free.

“For some people an annuity will be the right choice whereas others might want to take their whole tax free lump sum and convert the rest to drawdown.

“We’ve extended the choices even further by offering people the option of taking a number of smaller lump sums, instead of one single big lump sum.”

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