The Finance Bill 2014 received royal assent on 17 July 2014 bringing in to force a number of measures that will be important for occupational pension schemes.
In particular, what is now the Finance Act 2014, includes amendments to the trivial commutation limits. The maximum amount that a registered pension scheme can pay as a trivial commutation lump sum has been amended to allow trustees to commute a member's benefits, provided his total benefits in all registered pension schemes do not exceed £30,000. The commutation limit for a small lump sum increased to £10,000.
As expected, these limits have been backdated to 27 March. However, the limits are not overriding. Pension Schemes will have drafted the trivial commutation limits in to their own rules and depending on the draft in each particular case, the new limits may not apply and an amendment may be required.
Other provisions introduced by the Finance Act 2014 include increases to the maximum annual withdrawal cap for members who have opted for capped drawdown from 120% to 150% and the minimum income requirement for flexible drawdown reduced to £12,000 from £20,000.
HMRC has also been granted more powers in an attempt to tackle pensions liberation. These powers include wider remit to refuse registration to schemes (i.e. where the ‘main purpose’ for providing retirement benefits is not established, or where the scheme administrator is not a fit and proper person) or to de-register existing schemes and information gathering powers.