What is the aim of A-Day?

The main idea behind A-Day is to "increase choice and flexibility for all". The government's broad aim in the introduction of the new pension rules in April 2006 is to simplify the existing pension rules. The rules will affect all pensions including personal and work pensions. In a nutshell, A-Day aims to take the pressure off agencies that need to give pension advice by actually simplifying the whole pension system.

What pension changes will occur with A-Day?

oThe Standardisation of Tax Free Cash - The tax-free cash sum entitlement currently differs between Pension Schemes. Furthermore, the entitlement in the Occupational Pension Schemes can actually be less than 25%. The simplified pension rules will ensure that Tax Free Cash allowance of all Pension Schemes is set at 25% of the fund value as standard. If you have an occupational pension where the tax-free cash entitlement is higher than 25% then you will need to seek pension advice from an experienced Independent Financial Adviser, who will be able to help you protect this right.

oAlternatively Secured Pension - An Alternatively Secured Pension will also be introduced which will mean that after the age of 75 withdrawal of income will be known as "Alternatively Secured Pension" and will be similar to income drawdown. This allows you to draw an income, up to a maximum of 70% of the highest single-life annuity, each year from your pension fund.

oGreater Flexibility in Investment - There will also be greater flexibility in investment including the provision enabling you to hold residential property within your pension fund. You may also be able to sell and buy these properties between individuals.

oContributions - The amount you can currently contribute into a pension scheme is capped but A-Day is set to change all this. As of April this year, there will be no maximum amount of pension saving.

Who will be affected by these pension changes?

Actually nearly everybody who will work or has worked will be affected by these pension simplification rules. It will impact on any individual who already has a pension in place or any individual who will start a pension plan at any point in the future.

Where is the best place to get pension advice regarding A-Day?

It is always highly advisable to discuss any pension advice you may require with a professionally trained financial adviser. It is also worth noting that you should always check that any financial adviser you speak to is registered with the FSA and is thereby duty bound to offer you unbiased advice.