Pension Rule Changes

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:

  1. All existing rules governing pensions will be scrapped, to be replaced with a single regime.
  2. You will be able to contribute to more than one pension scheme at the same time.
  3. 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).
  4. You can claim tax relief on contributions of up to 100% of your annual earnings, subject to an upper annual allowance of £215,000.
  5. Even if you don’t pay tax, you can still claim tax relief on your contributions.
  6. From A-Day you can receive a pension and salary from the same employer.
  7. You can take up to 25% of your pension fund as a tax-free lump sum.
  8. 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.
  9. If you do have a very large pension, you have the right to “protect” your fund from the Lifetime Allowance Charge.
  10. Some people may have to wait longer before you can claim a pension.


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