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.

From this date there will be just one set of tax rules for all types of pension, with an individual Lifetime Allowance and an individual Annual Allowance. These are annually assessed and reset as the Government sees fit. All individuals will be able to fund up to these new attractive limits, although tax relief will be restricted for high earners. Schemes already in existence before this date will need to update their rules to allow some of the new flexibilities.

Exceeding these limits will simply trigger a tax charge.

The ‘A’ Day rules made the majority of pensions much simpler and there could be a number of key advantages

• Pensions are much easier to understand.
• Most customers now have greater flexibility in the size and timing of their contributions.

There will also be a number of other changes including :-

• Early retirement age has risen from age 50 to age 55 on 6th April 2010
• Full concurrency (i.e. being able to pay into any array of plans you wish), subject to the annual allowance
• Wide investment flexibility
• Up to 25% Tax Free Cash will be available from the majority of pension schemes.
• The ability to commute a ‘small’ fund as a one off lump sum as opposed to having to draw a regular income
• Flexible options at retirement when deciding to take benefits
• No need to ‘have to’ secure benefits at age 75 via an annuity

Why not contact us to review your retirement planning?