Category Archives: Pensions


Budget 2015: Lifetime allowance cut to £1m

Chancellor George Osborne has cut the lifetime allowance of tax-free pension savings from £1.25m to £1m. The old allowance of  £1.25m was “unsustainable”, Osborne said, and the new lifetime allowance will be indexed so that it can rise with inflation from 2018. Changes to the annual allowance, however, will not be made.

Cutting the lifetime allowance will be a blow to the positive changes made in other pension reforms, said Claire Trott, head of technical support at Talbot and Muir. It goes against the promise of increased freedoms and the encouragement to save in a pension scheme.

“Not only will it penalise those in money purchase schemes more than in final salary schemes but it adds another layer of complexity to people’s retirement planning,” said Trott. “This will mean another round of protections that people will need to decide if they need to apply for and possibly the choice to stop contributing for fear of tax charges at retirement.”

This is the third time that the lifetime allowance has been since 2012, when it was reduced from £1.8 million to £1.5 million. It was lowered again in 2013 to £1.25 million.

Osborne had considered cutting the annual allowance too, which is currently at £40,000 but decided against this because it would penalize long-standing public servants and reward higher-paid graduates.


The forgotten element – State pension reforms

In the wake of the government’s sweeping pension reforms, all the news has been about the legalisation of pension busting, whereby anyone with a UK-based pension will be able to cash in their entire pension pot from age 55.

However, the pension reforms didn’t just alter the landscape for money purchase schemes: the State pension has also been revised.

The State Pension age will be increased to 66 between 2018 and 2020, 67 between 2034 and 2036 and to 68 between 2044 and 2046, for both men and women. The government has also said it will review the State Pension age every five years, with the first review due to take place in the next Parliament. This review will include an analysis of life expectancy by the Government Actuary’s Department (GAD).

Other changes include a simplified single-tier pension. This will provide a higher flat-rate pension of at least £148.40 per week.

However, while it is ‘simplified,’ many are unsure what they actually qualify for.

According to an article posted in The Telegraph this week, Steve Webb, the pensions minister, admitted he may have “oversimplified” the new state pension and “in the meantime, some people will get more and others less than the full single-tier amount.”

Whatever the state pension will be when it comes to your retirement, one thing is certain – it won’t be enough to live a life of frills and fancies. If you’d like to enjoy your retirement and do the things you’ve always dreamed of, there’s only one way to make this possible: save more money while you’re working.

If you would like a retirement income review, please contact Alex Herbert via email: today.


55% “death tax” on pensions abolished

Headline for votes but what is the reality?

It is safe to say that the recent announcements during the Conservative Party Conference have certainly turned heads. Following the scandals and subsequent resignations of Mark Reckless and Brooke Newmark, it was essential that David Cameron and George Osborne used this conference to create positive headlines ahead of next year’s General Election. Continue reading