Budget 2014: The changes to pensions are revolutionary

Scrapping all those rules about annuities will transform the lives of millions

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Fiscally broadly neutral, and with no great fireworks on taxes, it would be easy to dismiss the Budget as a fairly routine, even dull  affair. Plain wrong.

Although it may yet go all awry (pasty tax style), the changes to personal pensions are revolutionary. Revolutionary. Scrapping all those rules about annuities and draw down will transform the lives of millions of pensioners, and prospective pensioners (i.e. all of us), and for the better.

I should declare an interest as someone who stands to benefit a lot by the new choices available to me, but the abolition of the rule that you have to take an annuity is enormously empowering for everyone who doesn't have a proper salary-related scheme. Some people may go nuts and blow the lot, like superannuated rock stars, and land the state with a bill for their welfare - but then again it's their cash, and they could have trashed their personal finances when in their twenties. Also the majority of hard savers who amass a pension pot are surely not the types to squander it.

I detect the hand of the brilliant pensions minister Steve Webb in this and the happy coincidence of Tory and Liberal instincts in a long overdue set of reforms. The Tories, at any rate, have got the pensioners vote sewn up and now they're displaying generosity towards those in their fifties - another group with a high propensity to vote as well as save. If I were Nick Clegg I would be keen to get the credit for these reforms; and draw the contrast especially with Labour's pledge to scrap higher rate tax relief on pension contributions. Who'd have thought pensions could be so politically charged?  But with such big sums at stake it really is a vital issue, even - perhaps especially - for those now starting their working lives.

Read more Osborne warns of hard choices despite higher growth
New 12-sided pound coin announced
Air Passenger Duty reforms welcomed by airlines
Stamp duty clampdown hits rich
Tax relief for regional theatre shows
Osborne reduces taxes on business investment
Summary of The Independent's Budget coverage
 

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