The MG team were at the B2B Expo in Ashford last month, it was a great opportunity to make new contacts and catch up with
some familiar faces. If you missed the exhibition we will also be exhibiting at the B2B at The Kent County Cricket Ground,
Canterbury on 11 September and the Engineering & Construction Expo at The Kent Showground, Detling on 8 October.
Auto-Enrolment
We will be holding a series of workshops in the autumn where you will be able to learn about preparing for auto-enrolment. If you
would like to receive further information or register your interest please email Lee Trice
MG NEWS
Pension reform: what does it mean for you?
At the 2014 Budget, Chancellor George Osborne announced a package of measures set to radically overhaul the
pension rules and provide people with much greater flexibility as to how and when they take their pension savings.
Some of the changes took effect from 27 March 2014, while others are set to be introduced from April 2015 following
a period of consultation. Here is an introduction to the key areas of change:
Lump sums
Under the current rules, people aged 55 and over are able to take
a tax–free lump sum of 25% of their pension pot. Any lump sum
withdrawn in excess of that is an unauthorised payment and subject
to tax charges on the pension scheme member of 55% and potential
charges on the pension scheme administrator as well. The remainder
in excess of the tax–free lump sum can be taken in various ways.
Flexible drawdown
Under flexible drawdown, defined contribution scheme pension
savings can be withdrawn however the member wishes, provided
the member demonstrates that he or she has guaranteed
minimum income in retirement. This is set at £12,000 p.a. from
27 March 2014. Prior to that date it was necessary to have a
guaranteed minimum income of £20,000 p.a. Some pension
schemes may not allow flexible drawdown due to the rules of the
scheme.
Capped drawdowns and annuities
A member who is unable to meet the guaranteed minimum income
requirement can either enter a capped drawdown or take an annuity.
A capped drawdown allows income to be taken from the pension
each year up to a maximum amount. From 27 March 2014 this
is set at 150% of an equivalent annuity. Prior to 27 March, the
figure was 120% of an equivalent annuity.
Although there is now no requirement to purchase
an annuity with the balance of the pension pot, most
people do.
Pensions paid either by drawdown or from an annuity are taxed at the
member’s marginal rate of tax.
Trivial commutation
Under the trivial commutation rules, those aged 60 or over who
have total pension savings of £30,000 or less (£18,000 prior to
27 March 2014) can take the whole amount as a lump sum. The first
25% is tax–free and the remainder is taxed at their marginal rate.
Small pension pots
Regardless of your pension wealth, under the small pots rules, up to
three personal pension pots and any number of occupational pension
pots worth less than £10,000 (£2,000 prior to 27 March 2014) can
be taken as a lump sum. Again, the first 25% is tax–free and the
remainder is taxed at the member’s marginal rate of tax.
More flexibility
Significant plans for further flexibility have been announced, but
remain subject to finalisation after the current period of consultation
and discussion.
In his 2014 Budget Speech the Chancellor said
that key to this flexibility will be an option for
many pension savers to draw their accumulated
pension pot at any time from age 55, subject
only to an income tax charge.
Exactly what form the rules will take is
currently unknown, so please contact us
before taking any action.
Principals:
Jon Gammon, Antony Tutt, Mark Britland, Abhi Jain, Roland Parry, Andy Childs
Managers:
John Daryn, David Brookes, Linda Hayward, Peter Horton
Magee Gammon is a trading style of Magee Gammon Partnership LLP and Magee Gammon Corporate Limited. Magee Gammon Corporate Limited is authorised to carry on audit work and
regulated for a range of investment business activities by The Institute of Chartered Accountants in England and Wales.
T O P I C A L I N F O R M A T I O N F R O M M A G E E G A M M O N
Email:
Website:
Henwood House, Henwood, Ashford, Kent TN24 8DH Phone: 01233 630000
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