New Pension Rules! It’s all change for pensions.
On 6th April 2006 (a date referred to in the Financial Services World as “A Day”), the rules regarding UK Pension Schemes were changed radically.
The new pension rules replaced 8 former pension tax regimes with one new simplified regime and an era of “Pensions Simplification” was born. Most commentators welcomed the simplified rules and future pension planning seemed to be easier and more straight forward than before.
- The compulsory requirement to draw pension benefits no later than age 75 will no longer exist.
- Maximum pension contributions will be limited to £50,000 per year.
- Pension contributions can include up to 3 years previously unused pension contribution allowances
- A 55% tax charge will apply to certain pension benefits which were previously almost entirely free of tax.
- Certain pension benefits being taxed at 55% whereas previously the rate of tax was 35%.
And if that was not enough the European Court of Justice ruled last week that insurers cannot set different premiums for men and women as this would be classified as gender discrimination. This will have a marked effect on the cost of annuities.
The new pension rule changes will produce winners and losers and will have an effect on individuals both pre and post retirement.
If you would like to investigate how the new pension rules could affect you, please contact us and we will be glad to help.
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