From 6th.April 2006 the way we save for our retirement and the way we take our pension benefits changed dramatically.
Individuals now have a Life Time Allowance of £1.5 Million ( pension fund value ) – rises each year -to base his/her pension fund on starting tax year 2006/07. Any excess in that fund value attracts a recovery charge on the fund of 35%.
No change, contributions to the pension must not exceed £3,600 pa. If the contribution exceeds this then the contributor’s income has to be verified. This still allows non earners to contribute.
The total contribution to a pension(s) can be 100% of earnings up to £215,000 (increases each tax year) which is your Annual Allowance. This amount includes your and your employer’s contribution.
50 for both Protected and Non protected rights rising to age 55 in 2010.
- Lifetime Annuity - As before, you buy an annuity which will pay an income for you lifetime and if selected an income for a dependent.
- Capital Protected – This pays an annuity but if the annuitant dies before the age of 75 the contribution less any annuity payments less a 35 % tax charge will be repaid.
- Limited Period Annuities. Only a 5 yr term
- Income Drawdown – No real changes apart from there is no real requirement to take income,available up to the age 75 yrs.