Pensions A-Day Highlights
With A-Day the Government has simplified UK pensions. With these new measures there is greater flexibility in your financial planning.
- Since 6 April 2006 anyone can start any type and any number of pension plans.
- All UK residents will be able to invest up to 3,600 gross each year into a pension with tax relief. If you have sufficient taxable income you will be allowed to contribute up to 100% of these earnings (up to a maximum of £215,000 in 2006/7) and get full tax relief.
- The right to carry forward or carry back tax relief on your pension plan contributions ended on 5 April 2006.
- As a pension plan holder it will be possible for another person to invest in your fund providing you have taxable earnings.
- A new lifetime allowance is to be introduced which sets a limit on the maximum benefits available from all your pension funds. This allowance kicks in when you take your pension benefits. For 2006/7 this limit will be £1.5m.
It will be increased each year to maintain its real benefit.
- If your fund is greater than the lifetime allowance there will be a change of 25% on the excess. If you take the extra as a lump sum the charge will be 55%.
- You can protect funds if it is likely their value will be greater than the lifetime allowance. There are two forms of protection and you can register for this up to April 2009.
- Minimum retirement age for all pensions will be 50 from April 2006. From 6 April 2010 the new minimum age will be 55. There are exceptions for those with serious ill health or with special provisions built into their schemes.
- Most schemes will provide tax fee cash lump sums of 25% of the final fund.
- You don't have to retire to draw a pension. Income drawdown means you can take an income without the need to buy an annuity. Income drawdown - or unsecured income- ends at age 75. There will, however, be an option to continue drawing down an income after 75. This will be the new "alternatively secured pension".
Security Financial Services is authorised and regulated by the Financial Services Authority.
For more information on the implications of A-Day for your financial future, contact Richard at Security Financial Services Ltd by using the form below.
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