Retirees are no longer required to buy an annuity, but critics say savers may now be tempted to start a spending spree.
Major changes to pension rules come which will allow savers to have more control over their money when they retire.
People aged over 55 are now able to cash in their pensions and spend them as they wish. The changes were announced by Chancellor George Osborne in his Autumn Statement and were expanded in last month’s Budget.
Retirees are no longer required to use their pension pot to buy an annuity when they retire.
They can now take their pot in one go, or use it like a bank account to withdraw money in slices.
The changes will apply to the 320,000 people who retire each year with a defined contribution (DC) pension.
Around 540,000 people will be able to take control of their savings, according to estimates from the Government.
And from next year, as many as six million pensioners who already have an annuity will be allowed to sell them for cash.
Critics of the new system say savers will be tempted to go on a spending spree, leaving the state to pick up the tab later on.
But Pensions Minister Steve Webb said “We’re not going to have two million people making decisions this week or this month.
