Key pensions measures announced in today's Budget:
Annual allowance reduction for those earning more than £150,000 pa
From April 2016 the Government will reduce the annual allowance for those with annual incomes over £150,000. For every £2 of income over £150,000, an individual’s annual allowance will be reduced by £1, down to a minimum of £10,000. Notably, employee and employer pension contributions are taken into account when assessing whether an individual has an annual income over £150,000, although the Budget document states the measure will not apply if an individual's income net of pension contributions is less than £110,000.
In connection with the annual allowance changes, transitional rules are being introduced from Budget Day to align pension input periods with the tax year by April 2016
Consultation on reforming pensions tax relief
The Government is consulting on whether the system of pensions tax relief should be reformed.Possible options range from a from fundamental reform, such as taxing pension funds in a similar way to ISAs, to less radical changes.
Secondary market for annuities – implementation from 2017
The Government has announced it will set out plans in the Autumn for a secondary annuities market to allow existing annuity holders to sell the right to their annuity income. The planned implementation date for these measures is 2017.
Consultation on early exit penalties in relation to transfers
The Government will consult before the summer on options aimed at making the process for transferring pensions from one scheme to another quicker and smoother, including in relation to any "excessive" early exit penalties. If there is evidence of such penalties, the Government will consider imposing a legislative cap on these charges for those aged 55 or over.
Unfunded employer financed retirement benefit schemes (EFRBS)
The government will consult on tackling the use of unfunded EFRBS to obtain a tax advantage in relation to remuneration.
Salary sacrifice to stay for now
Prior to the Budget there had been speculation that the Chancellor might abolish salary sacrifice arrangements. This has not happened, but the Government states it will "actively monitor" the growth in such schemes.