The Finance Act 2013 was published on 18 July 2013. It contains the following provisions relating to occupational and personal pension schemes:
- from 6 April 2014, the annual allowance will fall from £50,000 to £40,000 and the standard lifetime allowance will fall from £1.5m to £1.25m;
- individuals who expect their pensions to exceed £1.25m will be able to claim ‘Fixed Protection 2014’, provided that they have not already claimed primary, enhanced or fixed protection. As long as they claim this protection before 6 April 2014, it will enable them to be entitled to the greater of £1.5m and the standard lifetime allowance. ‘Individual Protection’ will be available from 6 April 2014 but plans will be included in the Finance Act 2014. Please see the HMRC updates section below for more information;
- HMRC has the power to make regulations to alter existing fixed protection rules, as a result of which The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013 arose. It provides that certain statutory increases do not constitute benefit accruals (which would make fixed protection 2014 unavailable) and that a relieved member of a relieved non-UK pension scheme can file a notice claiming fixed protection under the Finance Act 2012;
- the Finance Act 2004 is amended in relation to bridging pensions so that a scheme reduction could be made from the age of 60 to the age of 65 or to the state pension age, if higher than 65;
- reporting and exclusion requirements for qualifying recognised overseas pensions schemes (QROPS) have been tightened. Please see increased reporting requirements for QROPS article above;
- the annual capped drawdown limit has risen from 100 per cent to 120 per cent of the value of an equivalent annuity. This takes effect from an individual’s drawdown pension year starting on or after 26 March 2013 and applies to both a member’s drawdown and a dependent’s drawdown;
- The tax advantages of family pension plans, where employers pay pension contributions to the pension schemes of an employee’s family members, have been restricted with an anti-avoidance measure; and
- Consequential changes to existing tax legislation have been made to reflect amendments to contracting-out legislation following abolition.
Please click here to view the explanatory notes to the Act.