If you have a UK pension then you may need to be aware of three important changes that were announced in the recent Autumn Budget:
No 1. The change to the age that you can take an income from an invested pension.
We’ve been mentioning this to our clients for years now but it has just come into law and included in the Finance Bill 2021-22.
Currently you can take benefits at age 55. From 6 April 2028 you have to be 57. This is where good financial planning is vital if you had planned to retire earlier.
But – if you are a member of a uniformed services pension scheme (armed forces, firefighters, police) or a member of an registered pension scheme which exists as at 5 April 2023 where you can take benefits under age 57 there will be no change.
No 2. Recent proposals around the unfairness of changes to public sector schemes.
If you are a member of a public sector pension scheme you may well have heard of the McCloud Judgement (Google it). There will be further amendments to supplement reforms in relation to what was deemed to be unfair. See your individual scheme website to check how you will be compensated for the changes to your pension scheme. For members of the NHS Scheme, they will be offered choices at retirement giving them the option of taking 7 more years in the 1995/2008 Scheme rather than the 7 years accrual in the 2015 Scheme. Each individual will be able to determine which will benefit their own circumstances best.
No 3. Scheme Pays reporting
If you are one of our medical clients you will be very familiar with this! If you have exceeded the annual allowance limits and incurred a tax bill of over £2,000 in any one year that you’ve asked the scheme to pay on your behalf. Because often information has been late we have had to appeal to the pension scheme to accept the scheme pays election. Legislation will be introduced, to take effect from 6 April 2022, extending Scheme Pays reporting and payment deadlines to require the pension scheme to settle an annual allowance charge of £2,000 or more from a previous tax year within deadlines set by reference to when the administrator is notified of the charge rather than by reference to the end of the tax year. Hopefully this will make life easier.
If you have any questions around how these changes might affect you, Robson Laidler Wealth can help organise a pension plan to suit your financial situation. Get in touch.