The Finance Act 2011 went into law this week, with several negative effects on pensions:

  • Annual contributions over £50,000 may be subject to tax charges (Annual Allowance)
  • Lifetime benefits from pensions of over £1.5m may be subject to tax charges (Lifetime Allowance)

Planning opportunities do exist, and the rules are not as simple as shown, for example Annual contributions may be maximised through “Carry Forward” which allows unused allowances to be used as far back as three years; there are also different bases for calculating the value of ‘Scheme Pensions’ for the purposes of the Lifetime Allowance.

Due to this complexity care should be taken before making contributions or taking benefits from now. It may also be prudent to consider arranging for Fixed Protection, particularly if your pension assets are likely to breach the new £1.5m limit.

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