Are you a pensions winner or loser?

Find out who will benefit and who shouldn't touch new pension freedoms with a bargepole

winners  losers green road sign ...

Since last month, anyone over 55 has been able to spend, save or invest their entire defined contribution (DC) pension exactly as they wish.

However, before you rush to change your pension arrangements, find out who the new regulations are good for and who they're not.

Green light: if you want early access to your pension

Radical reforms mean that you gain much more control over your retirement savings. Importantly, you don't have to buy an annuity unless you want to. Instead, you can take all the money in one go (paying tax on 75 per cent of it), or you can take your 25 per cent tax-free lump sum and leave the balance in drawdown.

You can even use your pension as a bank account, taking money in small lump sums, with a quarter tax-free each time and the rest taxed as income.

This is great news if you need or want to retire early as you can start spending your personal or workplace pension before state support kicks in.

And, if you're still working, it means you can tap into money that was previously locked away. You can invest it elsewhere (many people are planning to buy property), use it to pay off debts, or spend it on a really long holiday.

Calculate your pension income options

Green light: if you withdraw the money slowly

If you can phase your pension withdrawals over several years you could minimise how much tax you pay significantly, or avoid it altogether.

As an example, if you took £10,000 a year over five years, you'd get a tax-free sum of £2,500 each time and be taxed on the remaining £7,500.

With a personal allowance of £10,500 you could feasibly get your hands on the cash entirely tax free, although the tax office will include your state pension in the calculation so you may prefer to defer taking payments for a few years.

If you then park the money in an individual savings account (ISA), you keep it out of the tax man's reach permanently. All adults currently have an annual £15,000 tax-free ISA allowance so there is a lot of scope to reduce your tax liabilities with careful planning.

Calculate your pension income options

Amber light: if you end up paying more tax

There is a sting in the tail to maximum flexibility: you could be dragged into a higher tax bracket. From April, any pension withdrawals in excess of the 25 per cent tax free sum are taxable at your marginal rate. This is your tax band once all your income, including any pension withdrawals, has been added together.

Everyone has a tax-free personal allowance – which will be £10,500 for the 2015-2016 tax year – but any income above this is taxed at 20 per cent up to £31,865, 40 per cent from £31,866 to £150,000, then 45 per cent over this.

If you withdraw too much from your pension in one year you could face a shock tax bill and once you've taken money out of your pension fund you can't give it back.

For example, if you earned £20,000 a year and then cashed in a £30,000 pot in one go you would end up paying around £4,600 in tax. Extra income from a pension can also affect eligibility for means-tested benefits so it pays to do your sums.

sad little child  adorable...

Amber light: if you have children and grandchildren

The government has also decided to change the tax treatment of pensions upon death, so if you have income from alternative sources such as savings and property, you may want to leave more money in your pension pot to pass on to your family.

From April this hated 'death tax' will be scrapped entirely if you die before age 75, whether your nominated beneficiary chooses to take the money as a lump sum or draw an income from it through drawdown.

Even after age 75 they will only pay income tax at their personal rate (or 45 per cent if they take it as a lump sum), rather than the 55 per cent that was previously charged.

Amber light: if you are too risk-averse

Drawing money from your pension and stashing it in a cash savings account may seem like the safest option but there are hidden dangers. First, most savings are subject to tax at 20 per cent and second, the pitifully low interest rates on offer make it impossible to keep up with inflation.

This little word is the saver's worst enemy because it erodes the spending power of money over time. So, if the price of goods and services goes up by two per cent your savings need to grow by at least the same rate otherwise your money will be losing value in real terms.

Red light: if you need a guaranteed income in retirement

Annuities aren't popular but don't dismiss them out of hand. They are still the only way to secure a guaranteed income for life and that is an important lifeline for many people with smaller pensions.

Rates are very poor but you can usually get a higher retirement income if you shop around, and insurance companies also offer enhanced annuities that pay a higher income to people with certain medical conditions, which reduce their life expectancy.

The uplift can be as high as 40 per cent and you might qualify if you smoke, take prescription medication or have high blood pressure.

Red light: if you're a big spender

The temptation to spank the whole of your retirement savings could prove too much. If you have other assets to fall back on and you can afford it, great. But there is a danger that people will run out of money within just a few years of retiring if they don't show great restraint.

People also tend to underestimate how long they will live, so managing money over the long term can be difficult. Not only do you have to make the cash last until you die, but you have to take account of inflation and the financial needs of your family.

That's why the government is offering free at-retirement guidance through its Pensionwise service. You may prefer to speak to professional financial planners who can advise you in greater detail.

7 ways to improve your retirement

7 ways to improve your retirement

More from High50:
Five ways you risk running out of money in retirement

Should I take my pension as a cash lump-sum

Why an annuity could still be your best pension option

Seven retirement nightmares

Seven retirement nightmares

Calculate your pension income options