UK Pensions Simplification
UK Pensions simplification introduced two new controls, the pension Lifetime Allowance (LA) and pension Annual Allowance (AA), replacing all eight previous tax regimes with their numerous complex rules.
‘A’ Day (the Appointed day) arrived on 6th April 2006 and brought with it sweeping and radical changes in relation to pension legislation. This has created a single universal regime to replace the previous eight tax regimes and the changes have affected savers in occupational and personal pension schemes, employers and financial advisers.
Exceeding the LA or the AA will simply trigger a tax charge.
Other changes included:
Early retirement age available from age 55
Full concurrency (i.e. being able to pay into any array of plans you wish), subject to the annual allowance and potential for carry forward
Wide investment flexibility
Up to 25% Tax Free Cash
The ability to commute ‘small’ funds of less than £18,000, as a one off lump sum as opposed to having to draw a regular income from age 60
Flexible options at retirement when deciding to take benefits such as capped and flexible drawdown
No need to ‘have to’ secure benefits at age 75 via an annuity
Why not contact us to review your retirement planning?