As ever, there are so many news stories flying about regarding pensions.
One mentioned recently is the possibility that the Treasury may restrict tax relief for higher rate taxpayers. This has been mooted prior to many previous budgets, however, pensions are an easy way to pay for changes the government desire in other areas. As such, we may finally see pensions become less attractive to higher rate taxpayers.
The second mentioned was the possiblity that the Treasury may restrict the tax free amount from pensions. Currently the Pension Commencement Lump Sum (PCLS) is tax free and limited to 25% of the fund value up to the Lifetime Allowance Limit (currently £1.8m, dropping to £1.5m in April 2012). If they limit the amount that is tax free to a monetary value, this will make the planning for retirement and how clients access pensions a different proposition altogether.
We can only wait and see on these announcements. Those who are concerned about these changes should talk to a financial adviser about the potential impact. Some of you may decide to make large contributions prior to the announcement date. If this is the case, ensure you seek out an adviser who has no conflicts of interest created by commission.
One aspect that is predictable is the lowering of the the Lifetime Allowance from £1.8m to £1.5m. If you think this may impact you, you need to talk to an adviser sooner rather than later. If you would like our help with any of these situations, or are concerned about their effect on your planning, please contact us for a no obligation discussion.