YOU would have had to be living in some far-flung corner of the world for the past few months not to know that the pension revolution is about to start, as my colleague Melanie Wright points out in this section.
The chancellor’s unexpected liberation of Britain’s pension pots kicks off just four weeks from now, which is why today, Money begins a series to help our readers negotiate the new money maze.
These freedoms are indeed liberating, but there is nothing simple about them and we don’t want any of you to get lost.
The changes got me thinking about what they mean for different age groups. For the young, who often need persuading to save into a pension, the new rules should act as a huge incentive. Save into a pension, get some tax relief from the government and some money contributed by your employer (if you have one), and then spend the cash as you wish when you are as ancient as your parents.
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Not that 55 is old, I hasten to add, but it usually looks like it is when you’re 18.
But what of older people? These new-found freedoms arrived too late for millions of pensioners, most of whom have already cashed in their pension pots to buy annuities. A great number of them did not get a very good deal, sadly.
This generation, many of whom enjoyed the Swinging Sixties — the Beatles, the Pill, the flares — must now feel like they are missing out on all the fun. The endless newspaper coverage about the new freedoms might be, well, rather irritating for this group, as well as dull and irrelevant.
If your annuity pays you a pathetic monthly income in return for the £100,000 of hard-earned cash you gave your insurance company, you really do not want to know about how your younger friends and family can now enjoy spending their £100,000, free of the shackles that were imposed on you.
Steve Webb, the pensions minister, has talked about allowing pensioners who feel less than loving towards the annuity deal they were sold (possibly even mis-sold) to escape the trap.
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They could sell their annuities and then use the money to take part in the new freedoms.
But there is one big perk they are eligible to enjoy — although it is their children who will be celebrating. The penal 55% tax charge that used to hit a pension pot when the saver died is also being scrapped on April 6. Children will now be able to inherit a pension without paying tax if their parent dies before the age of 75, or paying tax at their highest rate if the parent was 75 and over.
For those who believe in letting wealth cascade down the generations, as the former Tory prime minister John Major said, this change is certainly going to help.
Nationwide takes me for April fool
REGULAR readers will remember my exasperation at the hands of Nationwide in December. My plan to switch from one savings account paying an atrocious interest rate to another paying a better one was made unnecessarily difficult by the building society.
The saga involved Nationwide forgetting about my application, which meant I had to call the helpline several times, but was repeatedly transferred to the wrong department.
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Anyway, the matter was sorted out and the sparkly new regular savings account was opened.
It is a little frustrating to report now that a letter arrived from the building society last week, less than three months after opening this account.
And what did it say? “Your interest rate will be changing soon”. Obviously, this “change” is not for the better.
The rate that had first attracted me to the account is being reduced. When is this cruel cut coming into force? April 1.
No, I don’t think the Nationwide was joking.
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becky.barrow@sunday-times.co.uk or follow @beckymbarrow on Twitter