Paul Leatherbarrow, Liverpool
2010 Retirement age moved to 55 Change in normal minimum pension age from 50 to 55.This increases occurred overnight on 5 April 2010 and caused concern for those who intend to retire after this date but who will not be aged 55, including those ‘phasing’ their pension benefits.
Changes to qualification for Basic State Pension Individuals reaching state pension age after 5 April 2010 now only need 30 qualifying years to receive a full Basic State Pension. Female state pension age begins to increase from 60 to 65 The state pension age for women born on or after 6 April 1950 will increase gradually between 2010 and 2020. 50% tax rate for high earners This was introduced from 6 April 2010 for those with incomes greater then £150,000. Brought forward from April 2011 and increased from 45%. Personal allowance changes There will be a loss of £1 in personal allowance for every £2 of income earned over £100,000. Personal allowance lost when earnings approximately equal £112,950 – giving an effective 60% tax rate.
This can be offset by a pension contribution equal to the amount of income in excess of £100,000. 2011 Pension tax relief restrictions on income greater than £150,000 This will be introduced from 6 April, reducing the tax relief received from 50% to 20% for those with income over 180,000. There will be a tapered reduction torelief for those with income between £150,000 and £180,000. Annual allowance Will be reduced from £225,000 to £50,000 April 2011, the previous allowance was too generous. Not so good is intention not to index link the allowance until 2016 which means inflation will erode the value of allowance over the next five years. It is the governments intention not to impose the allowance in year of death or event of lumps ums being paid due to ill health but there will be no exemption in event of redundancy 2012 Personal accounts/workplace pension auto-enrolment Projected introduction in October 2012 but will be phased in over a period depending on the size of the employer. Workers aged 22 or over will be automatically enrolled into a qualifying workplace pension that receives prescribed levels of employee and employer contributions. Employees can choose to opt out.
The pension may be a personal account or an alternative arranged by the employer. Lifetime allowance Will be reduced from 1.8 million to 1.5 million in April 2012. Will only affect a small minority of people . anyone benefiting from enhanced or primary protection will continue to do so, anyone with between 1.5 and 1.8 million maximum and any one who has funded their pension based on the current lifetime allowance can elect to have protection at 1.8 million in exchange for no further pension funding any subsequent funding would automatically reduce the lifetime allowance to 1.5 million The DWP announced an end to occupational pension schemes ability to contract out of the second tier of the state scheme from 2012 members of Defined Benefit schemes that are contracted out will not able to transfer to certain types of money purchase arrangement including personal pension schemes. Abolition of Defined Contribution contracting out/protected right funds.
This is expected to take place with effect from 6 April 2012. There could be a potential problem ,because you have to leave your fund with your old employer if you leave their employment, the problem arises if the employer goes bust the scheme automatically goes into the pension protection fund which means members have no control of their fund Change from RPI to CPI for basic state pension Change to increases to the Basic State Pension From 2012 or, at the latest, by the end of the next parliament, the Basic State Pension will increase in line with national average earnings rather than retail prices inflation as it does currently. Full implementation of RDR proposals From 31 December, the new regulatory framework is expected to be introduced
© Copyright 2009 - 2012 IFAcompare.co.uk. All rights reserved.