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steller
Stranger
Joined: 27 Jan 2005
Posts: 2
Cash Points ££ 20.00
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 Posted: Tue Nov 29, 2005 5:29 am Post subject: Whats A day all about ? |
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Hi
Whats A day all about exactly whats going to be different with the pension setup ?
Thanks. |
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cashrich
Stranger
Joined: 26 Jan 2005
Posts: 11
Cash Points ££ 55.00
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| Posted: Tue Nov 29, 2005 5:31 am Post subject: |
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On ‘A Day’ all existing pension rules will effectively be abolished and we will have one single pensions regime for all schemes.
The Government’s initiative to simplify the pensions market is now planned to come into effect from 6 April 2006 – ‘A Day’. As well as simplifying the types of pensions available, the Government is introducing a cap on the total amount of money that you can have in your pension because of the generous tax breaks offered. Any existing pension money above this limit not 'protected' (see below) will suffer a penal tax charge.
The purpose of pension schemes will remain to help individuals provide a replacement income during retirement and provide, where required, a tax free cash lump sum. They will continue to enjoy their tax advantages, both in terms of a fund that grows virtually free of tax and also tax relief on contributions made to a scheme.
The new rules are expected to be finalised later this year but, based on what is proposed, there are numerous changes which provide both opportunities and some potential pitfalls that you should consider.
The main pitfall is that if you currently have or are likely to have substantial pension funds by April 2006, you could be affected by the new pensions cap.
This means that when, at some future point, benefits are taken from the pension fund, if the fund exceeds the lifetime allowance, the surplus will be subject to additional tax, known as the lifetime allowance charge. This will be 25% where the fund is used to provide additional income or 55% if the surplus is taken as a cash sum.
Lifetime allowance
The lifetime allowance will enable individuals to enjoy favourable tax treatment on their pension funds up to the allowance which will commence at £1.5 million in 2006/2007. This will increase each year until it reaches £1.8 million in 2010/2011 when the first review will be undertaken.
For individuals who already have funds in excess of the lifetime allowance or wish to ring-fence their fund against the risk of being subject to the new tax charge, there will be two forms of protection available.
• Primary Protection will provide an individual whose pension is already in excess of the lifetime allowance the ability to register the fund and therefore have their own higher personal limit. This limit will then be indexed in line with the retail price index.
• Enhanced Protection will enable an individual to ring-fence their existing pension fund plus future potential growth provided that, once granted, they do not make any further contributions.
New opportunities
The main opportunities appear to be that there will be new types of annuity, and an increased investment choice which can include your principal residence.
For the majority of people the new rules will be a welcome change, making pensions more understandable and more flexible.
There are significant opportunities to optimise your position before ‘A Day’ if your pension fund is large at the moment. |
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Phillipa
Veteran Investor
Joined: 05 Feb 2005
Posts: 419
Cash Points ££ 3383.78
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| Posted: Thu Dec 01, 2005 11:02 pm Post subject: |
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Also income drawdown to AFTER age 75... not finalised yet but likely to be included  |
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Phillipa
Veteran Investor
Joined: 05 Feb 2005
Posts: 419
Cash Points ££ 3383.78
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| Posted: Thu Apr 06, 2006 5:00 am Post subject: |
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Its A day ! 
A summary of the benefits now that its happened -
1. Minimum Retirement age raised from 50 to 55
2. Annual contributions £215,000 with a min of £3,600 by anyone.
3. Lifetime pensions contributions capped at £1.8 mill
4. Can take small pensions in cash i.e. up to £15k !
5. 25% lump sum to everyone no matter the pension type.
6. Abolish the 75 year annuity deadline,
7. Expand in what one can invest a pension fund in i.e. REITS. |
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Ruby9
Newbie
Joined: 01 Oct 2004
Posts: 21
Cash Points ££ 95.00
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| Posted: Sun Apr 16, 2006 4:29 am Post subject: |
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| If I understand this right, I can put £3,600 per year into a pension fund, even if I am not working ? |
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Sarah
Money Manager
Joined: 16 Jul 2004
Posts: 831
Cash Points ££ 12024.38
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| Posted: Sun Apr 16, 2006 2:15 pm Post subject: |
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| Ruby9 wrote: | | If I understand this right, I can put £3,600 per year into a pension fund, even if I am not working ? |
Yes, everyone is entitled to put £3,600 into their pension pot every tax year regardless of earnings. |
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