Pensions Simplification

‘A’ Day (Appointed day) arrived on 6th April 2006 and brought with it sweeping and radical changes for all pension plans – whether occupational or personal.

After this date, the previous eight regimes were updated to just one set of tax rules for all types of pension, with an individual Lifetime Allowance (£1.65 million 2008/2009) and an individual Annual Allowance (£235,000 2008/2009). These limits increase each year. All individuals will be able to fund up to these new attractive limits.

Exceeding the limits will trigger a penal tax charge.

The ‘A’ Day rules make pensions much more simple for most customers and there are a number of key advantages for our customers in the new regime:

• Pensions are much easier to understand.

• Most customers have greater flexibility in the size and timing of their contributions.

• In many cases, there is no need to make regular contribution checks, which means simpler and even better processes and service.

There are also a number of other changes including:-

• Early retirement age rising from age 50 to age 55 from the year 2010

• Full concurrency (i.e. being able to pay into any number and type of plans you wish)

• Greater investment flexibility

• Up to 25% Tax Free Cash is available on many contracts which did not previously allow tax free elements

• Being able to take a ‘small’ fund as a one off lump sum as opposing to having to draw a regular income

• New and more flexible options at retirement when deciding to take benefits

• No more need to ‘have to’ secure benefits at age 75 as at present

• The ability to pass pension funds onto future generations using ‘family’ pensions.

Remember – as with all pensions legislation the rules may well change further in the future. For the latest why not contact us and review your retirement planning.

---