Pensions: The case so far
Chancellor Osborne’s emergency budget largely left the issue of pensions untouched, for now.
Contributions made by individuals will continue, in most cases, to receive tax relief at marginal rates of Income Tax up to 100% of earnings.
Contributions can be made on behalf of employees by employers in excess of earnings if justifiable as remuneration although there are complex interim restrictions for higher earners.
Broadly these restrict higher rate Income Tax relievable investment made by or on behalf of individuals to no more than �30,000 this year unless contributions have been made regularly (in HMRC terms this means at least quarterly) in excess of this figure starting before April 22, 2009.
There is a further tax implication for pension contributions made on behalf of lower earners where it is in excess of �255,000, although the individuals who may be affected by this are likely to be extremely rare.
It had been mooted that from 2011/12 the interim measures would be replaced with a gradual loss of higher rate relief for those with taxable income in excess of �150,000, with all higher rate relief lost for those receiving more than �180,000 p.a.
Balancing the long-term common sense need to encourage longer term savings with pragmatic ease of administration and policing, it is now stated that higher rate relief will be available but is likely to be limited to between �30,000 and �45,000 per individual. In addition, the announcement that the age after which you could incur the potentially draconian tax penalty for not purchasing an annuity with a pension fund (which can be as much as 82%) is to be increased from age 75 to 77 is indicative that this area is to be reassessed.
- 1 A12 reopens after air ambulance called to three-lorry crash
- 2 Suffolk campsite named among the best in the UK by the Guardian
- 3 Weather warning for Suffolk as thunderstorms expected to affect travel
- 4 'Like a Halloween scene' - huge caterpillar webs engulf hedges
- 5 Town take up option on Tyreece Simpson... plus two other youngsters update
- 6 Forbidden Suffolk: 6 places you can't visit in the county
- 7 Men convicted of kidnap and rape of Ipswich girl
- 8 New hair salon opens up with its very own puppy on the premises
- 9 Suffolk celebrates! Full list of county's 185 street parties for the Queen's jubilee
- 10 Dog walker in his 70s suffers cuts and bruises after attack in west Suffolk
The most significant issue politically was reserved for State Pensions. The good news is that increases to State Pensions will be linked to the greater of: 2.5%, the Retail Prices Index or, the National Average Earning Index. The bad news is that the Government intend to accelerate the increase in the State Pension age to age 66.
It is clear that increases in life expectancy are causing problems for the Government to budget for the cost of State provision. Encouragement needs to be given to individuals and business leaders to promote private solutions. Some will come in the form of protected tax relief coupled with the potential for compunction as we approach automatic employer sponsored pensions scheduled for 2012 and beyond.
This information is given by way of general guidance only, and no action should be taken solely on the basis of the information contained herein. No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.