Pensions are an ever changing area of law and can be complex. Let our technical managers help by providing:
The introduction of pensions flexibility in April 2015 has given greater freedom on how people access their pensions savings. However, with that greater level of freedom comes a greater risk that the options individuals choose may not be suitable for their needs. Decisions on pension options have far-reaching consequences that often cannot be reversed. Which is why both the Government and the Regulator have introduced additional requirements in respect of consumer protection, including:
The new Money Purchase Annual Allowance (MPAA) was introduced by the Taxation of Pensions Act 2014, on the 6th April 2015. It is designed to discourage individuals who seek to abuse the new flexible pension rules to avoid tax and potentially National Insurance Contributions by introducing a lower alternative annual allowance where flexibility has been accessed.
The MPAA does not replace the current Annual Allowance rules (or reduce the normal annual allowance).
In the post April 2015 world, the Annual Allowance will be the primary allowance to consider, however, when a trigger event happens the new MPAA rules will also apply.
When both rules apply, a comparison is required of the:
The higher of the two figures is used (example follows).View this item
Technically, pension contributions are unlimited. It is Tax Relief that is limited. And separately, the Annual Allowance rules apply. So when considering pension contributions to be paid by an individual, or on their behalf by a 3rd party or their employer, you must take in to account tax relief rules AND annual allowance rules.
Here are some common questions received in Technical Helpline.View this item