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Pensions Post A-Day

On the 6th April the Pension Bill and the Government's new pension's regime came into effect.  This became known in the industry as "A-Day".

"A-Day affects savers in both occupational and personal arrangements and has profound and far-reaching effects upon all pensions in force.  It also encompasses all Income Drawdown and Phased Retirement policies.

Various alterations were proposed, the primary objective being the simplification of the existing legislation.  As several of these changes are quite complex, it is, therefore, essential that you discuss how they might affect your retirement planning arrangements, with a qualified financial adviser.

What you need to know

  • LTA Lifetime Allowance- currently £1.5Million, next year £1.6M and indexed annually. Higher earners may exceed quite easily and includes ALL pensions. Enhanced and Primary Protection available.

  • AL Annual Allowance- currently £215,000- also indexed annually- individual may now contribute and receive tax relief on payments up to the level of earned income. Employer may contribute up to the AL in certain cases. NO Carry forward/ carry back- CURENT YEAR contributions ONLY permitted.

  • SIPP borrowing now limited to 50% of the net SIPP fund value. Relaxed rules on related transactions (i.e. property previously owned by member).

  • Tax Free Cash now limited to 25% maximum of all post A Day accrued funds. HOWEVER many pre A Day schemes (Executive Pension plans, Contracted in and Out Money Purchase Schemes permit a higher level) In most cases this is automatically protected from A Day.

  • Buy Out plans- Section 32- minimum contribution may enhance the level of PCLS available

  • Cash with no income may currently be available to pension holders over age 55.

If you would like to review your pension and discuss how A-Day has affected you contact Langtons today for your no charge or obligation review.

Please note: Tax rules and regulations can and often change. The information above is based on our understanding of current tax legislation.

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