Anyone aged 55 or over can now access their pension savings built up in a money purchase (defined contribution) scheme. This access can be as a one-off lump sum payment, an annuity purchase or as flexi-access draw-down. The downside is that once you start to access your pension in this way, the amount of further pension contributions you can make is restricted to £10,000 per year. This is to prevent people from drawing funds from their pension scheme and replacing the money in the same or another pension scheme, with additional tax relief.
From 6 April 2017, the amount you can contribute into a pension scheme after starting to draw your benefits will be reduced to £4,000 per year. If you don’t use that allowance in the year, it can’t be carried forward to the next tax year.
You can continue to save for retirement in other ways, such as using an Individual Savings Account (ISA). The current annual ISA contribution limit is increasing from £15,240 to £20,000 on 6 April 2017.