The government have made some changes to the tax regime around pensions.  These are set out below:

From 6 April 2023

• The annual allowance (the amount that you can save into a pension tax free each year) is increasing from £40,000 to £60,000.
• The money purchase annual allowance (the amount that you can save into a pension tax free, after you have drawn out your pension through income drawdown, or buying an annuity, or taking it all as cash) is increasing from £4,000 to £10,000
• The tapered annual allowance (the amount of money you can save into a pension tax free, if your total earnings are over a certain amount) has had a change to the amount of income threshold
  • The adjusted income threshold is increasing from £240,000 to £260,000
• There is no longer a lifetime allowance charge (a tax payment applied on pension over the lifetime allowance)
• If you had protection (enhanced, or fixed) and then had a “protection cessation event” that occurs after 6 April 2023, you will no longer lose your protection.
  • If your protection entitled you to a higher tax free cash amount, and then you have a protection cessation event, your tax free cash calculation will now be based on the value of your pension funds on 5 April 2023

If you have any questions regarding these changes, then please speak to your financial adviser.  Please note that Group Pensions cannot provide individual financial advice.

From 6 April 2024

• The Lifetime Allowance will be fully abolished
• The maximum amount that an individual can take tax free from their pension is £268, 275 (this is 25% of the former lifetime allowance of £1,073,100).  This amount is currently frozen (but may be updated in the future by the government).

Other changes

The government has not yet released details on how this will affect other connected pension benefits (such as serious ill health commutation).  HMRC has recently released a consultation on the tax treatment of these changes and the taxation of pensions.

You can read the consultation (and respond, if you wish) here: (https://www.gov.uk/government/publications/abolishing-the-pensions-lifetime-allowance/abolition-of-the-lifetime-allowance)

LCP (the adviser to many of the pension schemes) has collated a summary of the changes and how this might affect you here:  https://www.lcp.com/our-viewpoint/2023/07/pensions-bulletin-202329/

If you any questions regarding this, please speak to your financial adviser.  Group Pensions cannot provide individual financial advice.