2 : 10 - The Introduction of Pension Flexibilities Flashcards
As of 2014, what is the Minimum age to access pensions?
The minimum age for access is currently 55.
As of 2014, what is the Maximum age of selection?
There is no maximum age for accessing a pension. Once an individual has reached the minimum age of access they may access their pension at any time they choose and are able to take their benefits via a number of different methods. They may defer accessing their pension benefits indefinitely.
As of 2014, how is a Uncrystallised funds pension lump sum (UFPLS) treated?
Individuals may take all or part of their pension funds without establishing a drawdown portfolio or purchasing an annuity.
As of 2014, what is Capped drawdown?
Capped drawdown allows for an annual income between nil and 150% of the rates published by the Government Actuary’s Department (GAD)
As of 2017, what are the Pension exit fees?
Early exit charges have been capped at 1% of the value of existing contract-based personal pensions, including workplace personal pensions. Early exit charges that are set at less than 1% may not be increased.
No early exit charge can be applied to a new personal pension contract entered into after 31 March 2017.
What is currently the Tapered Annual Allowance?
Individuals who have adjusted income in any given tax year greater than £150,000 will have their annual allowance restricted for that particular tax year, providing that their threshold income (broadly adjusted income less pension contributions/accruals from all sources) exceeds £110,000.
For every £2 of adjusted income above £150,000, the annual allowance will be reduced by £1 until the annual allowance is reduced to £10,000.
The maximum reduction to the annual allowance will be £30,000, so anyone with adjusted income in excess of £210,000 will have an annual allowance of £10,000.
What is the maximum reduction to the annual allowance?
It will be £30,000, so anyone with adjusted income in excess of £210,000 will have an annual allowance of £10,000.
Is it possible to carry forward any Unused Annual Allowance?
It is possible to make contributions in excess of the annual allowance and not suffer an annual allowance charge if an individual has unused annual allowances in the previous three tax years and sufficient UK taxable earnings in the current year to claim tax relief.
In what circumstances can an individual carry forward Unused Annual Allowance?
- Their annual allowance for the current tax year must be fully used first.
- Any unused allowances from the previous three tax years can then be used, earliest year first.
- Carry-forward relates to unused annual allowance, not unused tax relief.
- Any contribution made in the current tax year, even when mopping up previous unused allowances, will be assessed for tax relief purposes against tax-relievable income in the current tax year. This means individuals must have sufficient earnings in the current tax year to fully benefit from any tax relief.
What is the The Annual Allowance History?
2014–15 to 2018–19 £40,000
2013–14 £50,000
2012–13 £50,000
What tips has TPAR published to enable individuals to protect themselves from pension scammers?
- Act immediately if they think they have been scammed – if they have signed documents, they should contact their pension provider as they may be able to stop a transfer. Alternatively, the Pension Advisory Service (TPAS) should be contacted.
- Hang up if they receive a cold call – unsolicited texts, calls, letters or emails are, in most instances, scammers. Pension Wise and other government-backed bodies will never call to offer a review claiming to be affiliated with those bodies.
- Individuals should beware of unregulated investments, such as those offering guaranteed returns. In particular, they should be aware of investments that ‘put all of your eggs in one basket’, such as hotels, vineyards and overseas ventures. Visit the FCA’s scam smart website (www.fca.org.uk/scamsmart) to determine if the offer is a known scam.
- Use only a regulated adviser. Go to the FCA’s website to determine whether the adviser is authorised to give advice on pensions.
