Pension Rule Changes
March 20th, 2006 No Comments » | POSTED BY ROB
There’s plenty of confusion and ignorance about the forthcoming changes to pension rules on April 6th (A-Day), partly down to the complexity of the products and because of vague rules laid out by the government.
The Motley Fool has a nice piece, Ten Things To Know About Pensions, which explains what is going to happen under the new rules:
- All existing rules governing pensions will be scrapped, to be replaced with a single regime.
- You will be able to contribute to more than one pension scheme at the same time.
- There is no limit on the amount of money that you can save in a pension, or the number of pension schemes you can contribute to (although there are limits on the amount of tax relief you can claim).
- You can claim tax relief on contributions of up to 100% of your annual earnings, subject to an upper annual allowance of £215,000.
- Even if you don’t pay tax, you can still claim tax relief on your contributions.
- From A-Day you can receive a pension and salary from the same employer.
- You can take up to 25% of your pension fund as a tax-free lump sum.
- You may face a tax charge of up to 55% if your pension pot is worth more than the new Lifetime Allowance when you come to take your pension.
- If you do have a very large pension, you have the right to “protect” your fund from the Lifetime Allowance Charge.
- Some people may have to wait longer before you can claim a pension.
