Pension Changes 2015
Given the changes announced in the recent budget, those that are now in place and those due to come into force from April 6th 2015, pensions could once again become an attractive investment option.
The key changes are:
- Every member of a defined contribution pension scheme will be able to access their entire pension from age 55
- The pension commencement lump sum will remain at the current level of 25% and will be tax free.
- Any income taken after this date can be taken without limits, subject to income tax at the member’s marginal rate of tax.
- The change will be fully retrospective so anyone in an income draw-down arrangement can benefit from the change.
From these points it can be seen that there is going to be increased flexibility available to individuals in how they manage their strategy to optimise their retirement income.
If this flexibility now makes investing in pensions more appealing then utilising the carry forward rules to maximise your pension may be something to consider.
If you were a member of a pension scheme for the three years prior to the current tax year 2014/15 you may be able to invest up to £190,000 into a pension arrangement and take advantage of the new relaxed rule changes proposed for 6th April 2015.
If you have excess funds within your trading company, you can use these funds to make employer pension contributions in the same way as personal contributions. Employer pension contributions qualify for corporation tax relief (subject to the ‘wholly and exclusively’ rules), therefore they are an effective way of extracting excess income from a company.
Of course this is only a very brief synopsis of the changes and every case is different.
Please contact me if you wish to discuss your pension position.
0845 365 1000