:00:00. > :00:00.We will be looking at pensions and the small print and work out who is
:00:00. > :00:18.affected by what and when. As always, the full Your Money service.
:00:19. > :00:20.It was a day last Wednesday. What will be be talking about?
:00:21. > :00:23.Take a wild guess. More freedom for pensioners to spend
:00:24. > :00:26.the money you've saved during your working life. Scrapping the need for
:00:27. > :00:29.an annuity, that's what the Chancellor George Osborne announced
:00:30. > :00:32.in his Budget this week ` wanting to give people more control in how they
:00:33. > :00:35.manage their income after retirement. But will you be able to
:00:36. > :00:38.manage your retirement money? And keeping more of the interest you
:00:39. > :00:42.earn out of the taxman's hands. A big leap in the amount of money we
:00:43. > :00:44.can put in tax efficient ISA accounts. But are they worth the
:00:45. > :00:47.money? We will get some advice. So the Chancellor's lifting the
:00:48. > :00:50.shackles on pensioners, giving retired people who've saved more
:00:51. > :00:53.freedom to decide what to do with the money in their personal pension
:00:54. > :00:56.pot. Quick, Maud, book that cruise! George Osborne wants to get rid of
:00:57. > :01:00.rules that effectively force most retired people to swap some of their
:01:01. > :01:03.pension savings for an annuity ` an investment that pays a guaranteed
:01:04. > :01:07.income however long you live. 90% of people who retire buy an
:01:08. > :01:11.annuity with their pension savings. Years of low interest rates mean
:01:12. > :01:14.they've not been getting much for their money. The Chancellor says he
:01:15. > :01:17.wants to change the rules so instead of buying an annuity retired people
:01:18. > :01:21.can live off the cash they've saved and/or take that money and invest it
:01:22. > :01:24.in something else. He says he'll scrap the 55% tax charge that
:01:25. > :01:31.currently stops people from taking more cash than they're allowed from
:01:32. > :01:34.their pension pot after they retire. Malcolm McLean is a pensions
:01:35. > :01:38.industry consultant at Barnett Waddingham. For 13 years, he was
:01:39. > :01:49.Chief Executive of the Pensions Advisory Service. Sarah Pennels is
:01:50. > :01:52.editor of the website Savvywoman.co.uk full
:01:53. > :02:01.for people who have. It is not for people on a guaranteed
:02:02. > :02:07.works pension scheme linked to their salary ` not teachers, civil
:02:08. > :02:12.servants, police etc. Absolutely. It is people who are built up a pot of
:02:13. > :02:16.money over a number of years. At the moment, they have to use that pot to
:02:17. > :02:21.get an income for themselves in their retirement years. In many
:02:22. > :02:25.cases, that means taking out an annuity. Over the last four years,
:02:26. > :02:30.annuity rates have been on a slide and things have not worked very well
:02:31. > :02:35.in the market. What the Chancellor said is that instead of having to
:02:36. > :02:40.abide by a number of restricted rules on this, people will be given
:02:41. > :02:45.freedom to decide for themselves what to spend that money on. I think
:02:46. > :02:48.it is not as revolutionaries to think that people who have been
:02:49. > :02:53.saving money all their lives, to allow them to decide how they want
:02:54. > :02:58.to spend that money. They will possibly, probably need advice, it
:02:59. > :03:05.is the best thing to do as there are tax implications if you draw out the
:03:06. > :03:14.money. I keep reading about people saying that people buy flash cards
:03:15. > :03:18.and cruises and things. If the do that, they will pay a lot of tax. I
:03:19. > :03:22.don't think people will do that. Thinking long`term, this is going to
:03:23. > :03:27.become for them a budgetary issue, rather than a pension one. They need
:03:28. > :03:34.advice and they'll get guidance, the Government says, from various
:03:35. > :03:47.sources. If you have retired already, are you affected by this?
:03:48. > :03:58.If you've already bought your annuity, too late for you.
:03:59. > :04:05.You get a 30 day cooling off period, but in the last couple of days, a
:04:06. > :04:09.number of annuity providers say they will be extending back to 45 or 60
:04:10. > :04:15.days, so the first thing to do is check with them. Malcolm's point is
:04:16. > :04:21.it is not about taking the money and spending it on living the high life,
:04:22. > :04:25.it means taking the money and reinvesting it, maybe just putting
:04:26. > :04:31.it in the bank. Maybe in some cases, buying an annuity. That's right.
:04:32. > :04:37.We're not going to see the end of annuity is because people can take
:04:38. > :04:42.money from their pension fund. People with pension pots that are
:04:43. > :04:47.small cannot afford to take risks. If you put money in the bank at the
:04:48. > :04:53.moment with interests rates as they are, you're losing money because of
:04:54. > :04:57.the inflation rates. If people feel better being in charge of their
:04:58. > :05:02.money, they may come back to buying an annuity. What can people do today
:05:03. > :05:07.to make the most of these changes? From the 27th of this month, some of
:05:08. > :05:15.the restrictions will be lifted. You will be able to take more of the
:05:16. > :05:21.money out in cash. But the full change actually comes in when the
:05:22. > :05:25.old shackles are off from April 2015, so that is some time off. In
:05:26. > :05:30.the meantime, people need to think carefully. For some people, and
:05:31. > :05:35.annuity will still be the right answer, it will give them peace of
:05:36. > :05:39.mind throughout their retirement, and if they do live longer than
:05:40. > :05:45.expected, and many people are living into their 90s, they will make a
:05:46. > :05:53.profit on it, but nobody knows how long people live, so it is a gamble
:05:54. > :06:05.either way. The rule is, never take the first year offered, shop around.
:06:06. > :06:15.You mentioned that from the 27th of March, you can take more. 25% of
:06:16. > :06:21.that will be tax`free and the rest will be taxed when you draw it out
:06:22. > :06:31.at your marginal tax rate. Another phrase in the budget that chills the
:06:32. > :06:35.heart, flexible drawdown rules. It means that the moment, there are
:06:36. > :06:42.limits on how much you can take from your pension unless you have a lot
:06:43. > :06:46.of other income coming in. It is set at 120% of the annuity rate. From
:06:47. > :06:49.next week, you can increase the amount you take, but that doesn't
:06:50. > :06:54.this is certainly mean it will be the right thing for you to do. You
:06:55. > :07:17.have written about it on your website. Thank you for sharing your
:07:18. > :07:20.expertise. Some other things of interest to the
:07:21. > :07:24.golden generation ` if you're paying 10p in the pound in tax on the
:07:25. > :07:27.interest you earn from your savings, that's being cut to zero. Fed up
:07:28. > :07:30.with low interest rates at the bank? National Savings is to launch a new
:07:31. > :07:34.Pensioner Bond. Interest rates are expected to be 2.8% if you lock your
:07:35. > :07:37.money up for one year ` 4% if you take out the three year bond.
:07:38. > :07:41.Crucially, it doesn't look like the rate will be linked to inflation, so
:07:42. > :07:44.if prices rise sharply, you'll be left behind. And the amount you can
:07:45. > :07:48.save in Premium Bonds will go up from 30 grand to 40 grand in June,
:07:49. > :07:51.and up again to 50 grand next year. Of course, there are no interest
:07:52. > :07:54.payments there, but the second ?1 million monthly prize is being
:07:55. > :07:58.brought back. And don't forget this. The tax on bingo is cut in half to
:07:59. > :08:01.1%. That brings it into line with other gambling taxes. Rank has
:08:02. > :08:04.already said that will allow it to open three new bingo halls. Tax on
:08:05. > :08:08.Scotch whisky, spirits and cider has been frozen. And there's a penny off
:08:09. > :08:12.the pint ` tax on beer cut by 1p, but the tax on cigarettes is up
:08:13. > :08:15.again. Did you think that was all? Silly billy. Workers will be able to
:08:16. > :08:19.keep more of their money before paying tax ` the point at which we
:08:20. > :08:22.start paying income tax will rise to ?10, 500. The starting point for the
:08:23. > :08:26.40% tax rate will rise by just under ?1,000 to ?42, 285. And up to two
:08:27. > :08:29.million parents who work are to get more help with their childcare
:08:30. > :08:33.costs. From September next year ` 2015 ` they'll get vouchers worth up
:08:34. > :08:36.to ?2,000 a year. The thrupenny bit is back ` though this time it will
:08:37. > :08:39.be cold the new one`pound coin. 12 sides will apparently be harder to
:08:40. > :08:42.forge. And double good news for drivers. The Chancellor cancelled
:08:43. > :08:45.the next planned increase in fuel tax. Meanwhile, the AA says petrol
:08:46. > :08:58.prices are now at their lowest levels in three years. They could be
:08:59. > :09:03.an extra ?150 million to help people build their own homes. And tax
:09:04. > :09:07.relief could be cut if you put your money into solar energy schemes.
:09:08. > :09:11.Details on the government website. News for savers now. We can put more
:09:12. > :09:14.money into tax efficient ISA accounts. That is if you've got the
:09:15. > :09:19.spare cash. And if you know what an ISA actually is. Many people don't.
:09:20. > :09:23.Here's Alice Baxter. To save or not to save. When it
:09:24. > :09:28.comes to putting your hard earned cash into a tax`free ISA, analysts
:09:29. > :09:38.and politicians tell us it is a no`brainer. But of the 30 million
:09:39. > :09:47.Britons entitled is to them, less than half a subscribe. And do enough
:09:48. > :09:51.of us even know what's an ISA is? It's to do with money in the bag.
:09:52. > :10:00.I've never heard of it before. Do you think you pay tax on them? I do
:10:01. > :10:08.believe you pay tax. Did you know you can open up a new ISA every
:10:09. > :10:14.year? I didn't know that. A lot of people don't really understand what
:10:15. > :10:21.an ISA is. The stocks and shares ISAs, you can invest in Germany may
:10:22. > :10:25.go down as well as up all stop I had a lady other weekly didn't realise
:10:26. > :10:32.you were allowed to have one ISA per tax year. A lot of people don't even
:10:33. > :10:36.know what a tax year. Getting your head round the financial jargon is
:10:37. > :11:02.daft, but the numbers speak for themselves. You could get ?100,000
:11:03. > :11:09.of tax`free income. For a cash ISA, you would get ?20,000 of tax`free
:11:10. > :11:15.interest. No one will have a single new ISA. Should this be taken as
:11:16. > :11:20.further encouragement for savers? Absolutely. It is a simplification
:11:21. > :11:30.of the rules and erasing of the limits to a sensible level of
:11:31. > :11:34.15,000. It is nice and simple. The message is, when it comes to ISAs,
:11:35. > :11:39.either reduce them or lose them when it comes to the end of the tax year.
:11:40. > :11:45.It doesn't matter how much you have to save, you could have ?1000 or
:11:46. > :11:49.?100 or ?5, the more you can put away into your ISA piggy bank, the
:11:50. > :11:56.more you are giving away from the taxman and keeping for yourself.
:11:57. > :12:02.Alice Baxter, saving for a rainy day in London.
:12:03. > :12:05.So ` two big changes for ISAs in the Budget. The difference between a
:12:06. > :12:09.shares ISA and a cash ISA is being scrapped ` now it's just going to be
:12:10. > :12:13.one big pot with shares and cash. And the pot itself is getting a lot
:12:14. > :12:19.bigger, if you want ` the amount we can pay in will jump to ?15,000.
:12:20. > :12:26.Claire Walsh is from Pavilion Financial Services.
:12:27. > :12:33.Having one big pot should make things easier to understand.
:12:34. > :12:39.Hopefully. 15,000 is a nice round number. Has been confusion over ISAs
:12:40. > :12:50.in the past, about some of the limits restrictions. You can open an
:12:51. > :13:01.ISA each at tax year, seeded open one now and then another after the
:13:02. > :13:09.5th of April. It will go up in July to 15,000. The change from two types
:13:10. > :13:24.of ISA to one type of ISA, is that also in July? Yes. If if you look at
:13:25. > :13:31.cash ISAs, the interest is below what you would get in a current
:13:32. > :13:34.account. I think it is about shopping around. Interest rates are
:13:35. > :13:38.historically low at the moment, but what I'm courage people to do with
:13:39. > :13:47.cash ISAs is shop around and look for long`term rates. If you need to
:13:48. > :13:55.get the money out, you will lose a little bit, but chances are you
:13:56. > :13:59.probably won't. If you take money out of ISA, you can't put it back in
:14:00. > :14:09.if you've picked your annual allowance. Yes, you have to wait
:14:10. > :14:13.until the following tax year. Withdrawing money is not a good idea
:14:14. > :14:19.for a lot of people, but you can transferred it to another account if
:14:20. > :14:24.you find it as being a better rate. Yes, people come to me and they have
:14:25. > :14:28.been shopping around and they have several ISAs with lots of different
:14:29. > :14:34.institutions. It is easier to manage if you can consolidate them, but
:14:35. > :14:37.that takes a bit of work. Thank you very much. That's all from Your
:14:38. > :14:41.Money's special look at the Budget. If you mist anything or want more
:14:42. > :14:43.detail ` a good place to start is the Your Money bit of the BBC's
:14:44. > :14:48.website ` bbc.co.uk/money. Normal money service throughout the week on
:14:49. > :15:12.Twitter. We're back next week. Thanks for watching today.
:15:13. > :15:18.Most of us will get to see some sunshine today, but there will also
:15:19. > :15:19.be showers, with the cold