The way we see it

Lifetime Allowance set to increase

The announcement in October 2017 of the 3% September CPI means we hope to see a Lifetime Allowance (LTA) of £1,030,000 from April 2018. This is a welcome increase in pension allowances for the first time in 7 years. However, what is important when looking at saving options is not what the LTA is now, or when the fund exceeds it, rather what it might be when amount within the pension plan is tested. In addition, how any tax on excess pension savings compares to the tax on other types of savings and assets.

LPA registration fees to reduce

On 1st April 2017, the registration fee for a Lasting Power of Attorney (LPA) or Enduring Power of Attorney (EPA) in England and Wales reduced from £110 to £82. The fee for a repeat application to register an LPA will also fall from £55 to £41.

According to the Office of the Public Guardian, the fact that the volume of applications has rapidly increased means its income from registration fees now exceeds the cost of the service.

Changes to the treatment of pension death benefits – did you know?

Following on from our earlier post regarding the changes to pension death benefits. There are a couple of points you need to be aware of:

Firstly, the rules do not apply to all pension schemes, many older style schemes may not be eligible, and in each case it is at the discretion of the plan provider. Secondly, there is now flexibility as to who you can nominate to receive the death benefits from your pension. However, in order for this to happen you must complete a ‘nomination of beneficiaries’ form, this should include the names of all potential beneficiaries.

It is now vitally important that you have in place a pension plan which allows this flexibility and of equal importance you have the correct paperwork completed.

If you are unsure, please call us to arrange a meeting, we can review your current position and plan a way forward.

Pension Changes: Five things you should know

On 6th April 2015, the most radical changes to pension legislation for decades came into effect. Here are five key facts you can’t afford to ignore:

  1. No more reliance on annuities 
    It is still possible to buy an annuity, but you will also be able to take all of your pension as cash (25% of which is tax free), or invest the money and be allowed to take a flexible level of income without restriction.
  2. New ways of accessing your money
    From the age of 55 you will be allowed to access your pension money as and when you need it. With the changes, you can take the whole of your pension fund, with 25% tax free the remaining 75% will be subject to income tax. You can take the tax free lump sum of 25% at retirement, convert the rest of the fund to drawdown and pay income tax on the withdrawals. Alternatively there will be the option of leaving the pension fund invested and take a series of smaller lump sums with 25% of each withdrawal being tax free.‌
  3. No more 55% death tax
    This has been abolished on both unaccessed pension funds and those in drawdown, allowing more of your pension pot to be passed to your loved ones. Now only age at death dictates if and at what rate the funds are subject to tax. Death before age 75, all funds are passed to beneficiaries tax free. Death after age 75, the beneficiaries must pay income tax on the money received. They can choose to take the entire fund as a lump sum or take the fund as income, either way the money will be subject to the beneficiaries income tax rate.
  4. Continue investing until age 75
    If you are drawing an income from your retirement fund, under the new ‘flexi access drawdown’ rules you will still be able to invest into your pension and get tax relief until aged 75. However, the maximum you are able to pay into your pension is currently £10,000, this is going to be reduced from 5 April 2017 to £4,000. All payments need to be supported by income.
  5. No change to tax relief on contributions
    Currently you receive tax relief when you put money into your pension fund. Meaning if you are a basic rate taxpayer you receive 20% tax relief on your contributions and a higher rate tax payer will receive 40%. This is one element of pensions that will remain unchanged after April 5th.

This is just a brief synopsis of the changes, they will bring greater ‘freedom & choice’. However with greater choice there is a real need for advice to ensure you make the right decisions. We are here to guide you, call us to discuss your own situation.