From April 6, we are entering a whole new world for pensions which will make them much more attractive and flexible than ever before.

The contributions you make into a pension will continue to attract generous tax relief, especially so if you are a higher rate tax payer and, of course, all the investment returns within the pension are tax-free.

However, the main change is what you will be able to do with your pension pot.

Under the old rules you were mainly forced into buying an annuity (a contract that paid an income for life) but now you will be free to do what is best for your own circumstances from the age of 55.

So the money you withdraw apart from the 25 per cent tax-free lump sum, will be taxed as income (at your marginal rate) each year, so make sure you are aware of taking out too much as it could push into a higher tax band.

The new rules will allow you to take cash out of your pension pot as and when you want it although you will have to check with the pension provider you are currently with to see if they will allow it. If not seek financial advice for the potential benefits of moving to another provider to benefit from the full flexibility.

The reforms also make pensions an efficient vehicle for inheritance tax planning.

Currently any money left in your pot when you died was subject to 55 per cent tax but after April 6 this pot can pass on tax-free (no income tax or inheritance tax) as a pension for your loved ones if you die before the age of 75.

There are different tax rules if you die after the age of 75, where your beneficiaries will pay tax on any income they get from your pension fund at their marginal rate of tax.

Alternatively your beneficiaries could take the pension fund as a lump sum, but they would pay 45 per cent tax on this until April 2016.

Another important change from April 6 is that we will now talk about beneficiaries from then instead of dependants. From that date, you’ll be able to pass on your pension death benefits on to named beneficiaries rather than just dependants and so pensions can be passed on down the generations.

The new pension freedoms are proving very popular with savers but I would always suggest seeking financial advice so that you don’t suffer any unexpected tax implications or other unfortunate outcomes before making any decisions.