Personal Pension Plans

6th April 2006 heralded a complete overhaul of the pensions system in the UK, a change that has affected every single type of pension policy. Until 6th April 2006, there were eight different sets of legislation applicable to pensions, and the regime governing your plan depended upon the type of policy you have!  From now on, all that has changed, one set of rules apply to all, and everything is now supposed to be simple.  However, things are not that simple …

• There will be a lifetime limit on a pension fund which can be built up under pension arrangements. This will cover all rights under all arrangements to which an individual belongs. This limit will be indexed, generally in line with prices. If the lifetime limit is exceeded there will be a tax charge on the excess, how much depends of what you want to do with it! For this tax year the lifetime limit is £1,650,000.
• Individuals will be allowed to contribute up to 100% of net relevant earnings or £3,600 each year if higher with tax relief on contributions subject to a maximum of £235,000 for the tax year 2008/09
• Retirement benefits will be available only from age 55 from 2010 unless you are in ill-health (as determined by the scheme rules)
• Up to 25% of the fund can be withdrawn at retirement tax free
• Tax free cash can be taken, without the need to immediately take benefits and retire (under certain circumstances)
• Tax free cash can be taken, without the need to ever purchase an annuity.

The main areas of concern for individuals we find are that they are still unsure as to what they have in terms of pensions, and certainly they are unsure as to what options they have (as not all schemes are the same, despite the implied promise of simplification!!)
If you have retirement plans, and need to ensure that your plans are on course, contact us and we will try to help.

Click here to request more information about Personal Pension Plans.