Chris Hudson, Managing Director Retail Intermediary at Standard Life said: “One of the set piece announcements from the March Budget was the decision to scrap the pensions lifetime allowance. The intention of the policy was to encourage people with substantial pensions, most notably doctors, to stay in work rather than retire early in order to avoid a tax bill on their pension contributions. Policy documents published today highlight that outstanding questions regarding its implementation will be answered as part of the Autumn Finance Bill. They also indicate that complex changes to pension death benefits will be scrapped which is welcome news.
“Pensions are treated very favourably from an inheritance perspective with no tax due if the pension holder dies before 75 or at the marginal rate of the beneficiaries after that age. Under the original proposals linked to the scrapping of the allowance, where someone dies before 75, nominated beneficiaries would either have to receive the pension as a lump sum outside of a pension wrapper or as an income, taxable at their marginal rate. This proposed change is no longer being taken forward means an extra layer of pensions complexity will not be added.
“The removal of the LTA by April next year still has a number of logistical challenges that need to be worked through and people with funds above the previous LTA or protected level will be seeking to engage with their advisers or sourcing one very soon to assess the potential impact of future changes.”
|
