The Government has announced its intention to further review pensions and how they are treated tax-wise, and they are starting to crack down on pension benefits for the higher earners.
These restrictions on what higher earners can put into their pensions will come into effect from next April. While the annual maximum amount of pension contribution most people can put into their pension will remain at £40,000, those earning in excess of £150,000 will have this reduced on a sliding scale. Those earning in excess of £210,000 will have a maximum pension contribution allowance each year of only £10,000. The Government is also introducing a reduction in the pension Lifetime Allowance (the maximum one can accumulate in pension over his lifetime) from a total of £1.25 million down to £1 million from 6 April 2016.
The Government also announced it will be delaying its plans for setting up a market to allow individuals the freedom to sell their annuities. They have put back the planned starting date until 2017 to allow further studies to be done. There are further changes as to how pensions are taxed on death. Please contact us if you have any questions on these changes as they are somewhat complicated. Note: It is a very good idea to complete a letter of instruction to lodge with your pension provider to specify to whom you want the money paid in the event of your death.
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