Accumulation

Adrian Walker looks at pension planning opportunities created by the ability to carry forward unused annual allowances.

Adrian Walker highlights how completing one HMRC form can solve an age old problem.

The following guide outlines important information that is relevant to Skandia pension arrangements for individuals who are affected by the reduction in the annual allowance to £50,000 per annum.

Adrian Walker reminds us of the urgent need for pension input period planning during the current tax year.

The economic crisis has hit the retirement income planning of clients with money purchase pension savings.

Adrian Walker highlights some key areas of pension planning to do before tax-year end.

Pension Rules

This article explains the need to protect valuable pre A-Day tax-free cash entitlements held in occupational pension schemes.

Adrian Walker outlines upcoming changes to Protected Rights and the associated retirement planning opportunities.

Adrian Walker summarises the Government announcement of amendments to pension tax legislation on 9 December 2010.

The Equality Act is designed to consolidate numerous separate pieces of legislation into one set of rules, in order to achieve a more consistent approach to all aspects of anti-discrimination law. It has a bearing on the structures of pension arrangements. This article gives a more detailed analysis of it's effect on pensions.

QROPS now form a key element of retirement planning for individuals with UK pension funds who are planning to emigrate and want to look at the options for retaining their existing UK-registered pension scheme funds under UK legislation. This document looks to answer some of the key questions surrounding what a QROPS is and the rules applying to the way such schemes operate.

The key points for post-2012 workplace pensions following the Coalition Government’s review of auto-enrolment of employees into pension schemes.

When considering the possible transfer of the cash equivalent of a client’s defined pension benefit it is a regulatory requirement to prepare a detailed transfer analysis report (except where a client is crystallising benefits within 12 months of the transfer). To help you in this process we have provided a sample of the report output below to which we have added explanatory notes.

6 April 2011 saw significant changes to the rules governing how individuals could build retirement income through private pension arrangements with changes to the Lifetime Allowance threshold also applying from the beginning of the 2012/13 tax year.

The changes were introduced with relatively short notice and therefore little time to take account of the impact the changes may have for many clients.

To help identify the potential effect of the changes and the planning opportunities that are presented by the new funding rules we have built a series of short videos aimed at key elements of the new accumulation process.

The new pension funding rules introduced on 5 April 2011 brought in fixed protection for individuals saving towards the old lifetime allowance limit of £1.8 million. The form to apply for fixed protection is now available from HMRC.

Adrian Walker looks at pension planning opportunities created by the ability to carry forward unused annual allowances.

This article covers recent proposed changes to the QROPS regime and the impact they will have from 6 April 2012.

Decumulation

This article outlines the main issues financial advisers need to consider when pension consolidation is being proposed in connection with a spousal bypass arrangement.

The following sets out in detail the rules applying to the GMP that apply to members with pre 6 April 1997 service in a defined benefit contracted-out scheme. The information will be particularly useful when considering the transfer options available in respect of an accrued benefit under a Contracted-Out Salary Related (COSR) pension scheme.

Phil Carroll runs through a worked example detailing how you can efficiently supplement a client’s retirement ‘income’ through other tax wrappers.

This article explores the practical implications of the reduction in the Lifetime Allowance on scheme members.

Annual Allowance

There are no limits on the amount that can be contributed to a registered pension scheme. However, there are limits on the tax relief that can be given. Tax relief on member contributions is limited to 100% of an individual’s earnings or £3,600 if higher, and relief for employer contributions is subject to them being made wholly and exclusively for the purpose of the business.

There is no limit on the amount that can be saved into pension arrangements each year, but there is a limit on the amount that can get tax relief. The annual allowance is the maximum amount of tax relieved pension savings that can be made each year to all pension arrangements for an individual.

In simple terms a pension input period (PIP) is a period over which pension accrual is measured to determine whether an individual has exceeded the annual allowance in a particular tax year. It works on the principle of how much was saved from the start of the pension input period to the end of the pension input period.

The amount of pension saving made during a PIP is known as the pension input amount. The type of pension arrangement determines how the pension input amount is calculated. The types of arrangement are money purchase (for example personal pensions, executive pension schemes or additional voluntary contributions), defined benefit, cash balance and hybrid.

There are different annual allowance rules for Pension Input Periods that commenced before 14 October 2010 but end in the 2011/12 tax year.

Please note: Carry forward relates to unused annual allowance not unused tax relief. If the individual relies on carry forward to make a large personal contribution they must have the earnings in the current tax year to cover it.

If total pension inputs exceed an individual’s available annual allowance, they will be subject to an annual allowance tax charge. From 2011/12 onwards the charge will be levied at an ‘appropriate rate’. The appropriate rate is determined by adding the amount subject to the charge to the member’s ‘net income’.

Contributions

From the beginning of the 2010/11 tax year individuals with ‘net adjusted income’ in excess of £100,000 had their personal allowance reduced. This reduction will be at a rate of £1 for every £2 of income over £100,000. Based on the personal allowance, this means that any person with income over £114,950 will lose their full personal allowance applying for the 2011/12 tax year.

Employer contributions to registered pension schemes play an important part in funding retirement provision for directors and key employees. On an ongoing basis they will become more important when auto-enrolment is introduced into the private pension arena. This article covers the impact that employer contributions will have in relation to the pension changes introduced from 6 April 2011.

Salary sacrifice allows an employee to give up a level of salary and replace it with an employer’s pension contribution creating a larger pension contribution for the employee than they would have paid themselves for the same or lower net cost. The process can also be applied to bonus sacrifice with the same effects.

Higher rate tax relief is given by increasing the basic rate and higher rate band by the amount of gross contribution paid into a personal pension. The affect of this is that the investor will get higher rate relief by paying basic rate tax on income that they would have otherwise paid higher rate tax on.

Death benefits

Adrian Walker highlights further changes to pension rules brought in this April that may have slipped under the radar.

Adrian Walker looks at the death benefit implications of the new income withdrawal regime.

Drawdown

Adrian Walker runs through some of the key changes in the new income withdrawal regime. 

Adrian Walker explores the wider issues that need consideration for clients currently in, or considering using, income withdrawal.

This at a glance article describes the requirements that need to be met to access flexible drawdown.

Adrian Walker explains why people who are in drawdown but not taking any income could be losing out, and should seek advice.