In November, we wrote an article on the changes to the Lifetime Allowance and Annual Allowances for pension savers.
As we are fast approaching the end of the tax year, we wanted to remind everyone that the 5th April 2014 is a key date for pensions as:
- The Lifetime Allowance will reduce from £1.5m to £1.25m; and
- The Annual Allowance for Pension contributions will reduce from £50,000 to £40,000.
If your pension funds are valued at £1m and above then you should act now and consider how you might be able to protect the value of your pension fund being caught by a 55% tax charge.
For many clients who have deferred pension benefits held within an occupational Defined Benefit (Final Salary) Pension scheme, the value of these benefits could be quite significant and could mean that individuals approach the Lifetime Allowance without realising it.
It is possible to secure the lifetime allowance at £1.5m but you must elect to take fixed protection by 5th April 2014 and cease to make any further pension contributions.
To read our detailed article from November click here.
If you would like to discuss how you might be affected by the Lifetime Allowance or would like to discuss how you could maximise your pension contributions before the 5th April 2014, and take advantage of a £50,000 allowance before it is reduced, then please do contact a member of the team.