The 2014 budget took the pensions industry by surprise and offers a radical vision of the future of pensions. Greater freedom and control than ever before is now on the horizon as immediate changes are implemented and further changes are proposed to take effect from April next year.
1. For Defined Contribution schemes, members over the age of 55 are now able to take their pension pot as they wish, with no requirement to buy an annuity. This will mean that members have the option to draw as much or as little of their pension as they like, for example if they wish they could take their entire pension pot as a cash lump sum. The first 25% of the pension pot can be paid tax free and the remainder will be subject tot income tax at the appropriate income tax rate.
2. The limit for Trivial Commutation - the ability to take all of a pension funds as cash (partly tax-free and partly taxed as earned income) - has risen from £18,000 to £30,000.
3. The "Small Pots" limit - the ability to cash in exceptionally small policies in line with Trivial Commutation rules - has increased from two pots of £2,000 to three pots of £10,000
We would welcome the opportunity to discuss the Budget with you. Please call us on 0800 022 3103 and one of our Specialist Advisers would be happy to talk through this with you.
Leave your details with us and we will contact you to see how we can help you.