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Employment Law Newsletter - 2005 |
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Page 11 of 11
Pension Changes and the A-Day
The Government is making changes to the pension rules from 6th April 2006. All clients need be aware that they should consult their pension providers who will provide requisite specialist advice regarding how the changes will affect their own schemes. The intention is to simplify the rules and encourage people to save more for retirement. The changes include the following - (1) Employees will be able to potentially contribute their entire annual earnings up to an annual maximum of £215,000 and receive income tax relief. (2) There will be a standard lifetime allowance for pension savings of £1.5 million based on the value of the benefits of an individuals pension arrangements. (3) The maximum amount of tax free cash that can be paid out of any type of pension will be a standard 25% of the value of the benefits (4) The minimum retirement age is changing from 50 to 55. (5) An individual's total pension funds below £15,000 may be converted to cash, 25% of which will be tax-free. (6)Employees will be able to draw a pension from their employer's occupational scheme whilst continuing to work for that employer. (7) Employees will also be able to contribute to a personal or stakeholder pension in addition to an occupational scheme.
Keeping you up to date with every change to Employment Law. Support Line: 08 700 200 999 08 707 627 999.
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