Pensions Update - Spring Budget 2017 and Lifetime Allowance reminder
The March Spring Budget was a quieter budget for pensions compared with recent years. The Chancellor announced a few key measures in relation to pension schemes. This included:
Money Purchase Annual Allowance reduction
This only applies to those members who have ‘flexibly accessed’ their pension benefits e.g. taken advantage of the 2015 pension ‘freedoms and choice’ options. The ‘Money Purchase Annual Allowance’ (MPAA) is the amount that can be paid in one year to your Defined Contribution Pension arrangement without a tax charge applying.
The Budget confirmed that the reduction announced in the Autumn Statement 2016 to the money purchase annual allowance (from £10,000 to £4,000) will go ahead, taking effect on and after 6 April 2017. More information can be found here.
Tax charge for QROPS (Qualifying Recognised Overseas Pension Scheme) transfers
This only applies to those members who are considering a transfer overseas. With effect from 9 March 2017, the Government introduced a 25% charge on certain transfers to QROPS that were previously tax free. The Government’s intention is to align the tax treatment of overseas and UK pension schemes.
Payments out of funds transferred to a QROPS on or after 6 April 2017 will be subject to UK tax rules for five years after the date of the transfer, regardless of where the individual is resident. Transfers with a legitimate purpose, such as, retiring overseas who also fulfil set conditions, plus those transfers formally requested before 9 March 2017, will still be permitted free of tax.
These changes are in addition to the previously annouced changes to QROPS that are due to take effect from 6 April 2017.
More information please click here.
Lifetime Allowance - Individual Protection 2014 – Final reminder
This only applies to those members who believe they may have overall pension savings of between £1.25 and £1.5 million.
The window closes, on 5 April 2017, for an individual to register with HMRC for Individual Protection 2014 (if you can qualify for it); with the potential to protect a lifetime allowance of between £1.25m and £1.5m. For more information on the different protections available please click here.