As widely expected, the Chancellor signalled that up to five million existing pensioners will now be able to swap their annuity for cash.

In his Budget speech, George Osborne, said: “First, we will give five million pensioners access to their annuity. For many an annuity is the right product, but for some it makes sense to access their annuity now.So we’re changing the law to make that possible.

“From next year the punitive tax charge of at least 55% will be abolished. Tax will be applied only at the marginal rate. And we’ll consult to ensure pensioners get the right guidance and advice.”

Karen Bennett, sales and marketing director for commercial mortgages at Shawbrook Bank, said: “Most pensioners across the country will now be considering the best way to use their new freedom and it is likely that many will decide that property investment yields are a more attractive investment – however, they should exercise caution with their life’s savings.

“Buy-to-let may be considered a more flexible option than an annuity but needs very careful consideration and time investment to ensure the property will deliver the required returns and long-term capital gain. It’s also worth noting that the on-going maintenance and management of any buy-to-let is a specialist skill. New clients may be caught up in the excitement of this new freedom, but we urge brokers to counsel caution and make the demands of property investment clear.”