Finance Bill 2014 receives Royal Assent

On 17 July the Finance Bill 2014 received Royal Assent. This confirms that from 27 March 2014 the minimum qualifying income requirement for Flexible Drawdown is reduced from £20,000 to £12.000 per annum.

In addition the maximum capped drawdown is increased from 120% to 150% of GAD.

For those aged 60 and over:

1. Trivial commutation rules apply to any one pension fund of up to £10,000

2. Total pension funds of up to £30,000

On 21 July HM Treasury issued its response to the Consultation Document titled “Freedom and choice in pensions” which was issued in March. Click here to read it.

Topics include:

  • No minimum income requirement for Flexible Drawdown.
  • Those in Flexible Drawdown will have an annual allowance and so be able to contribute up to £10,000 per annum (currently NIL) to a registered pension scheme.
  • Those in capped drawdown (subject to the maximum GAD calculation) will be “grandfathered” and retain the standard annual allowance (currently£40,000). This will be lost as soon as annual income exceeds the capped calculation.
  • A review of the 55% tax charge levied on drawdown funds remaining on death. An announcement is expected in the Autumn Statement.
  • Increasing minimum age to access private pensions from 55 to 57 in 2028.
  • Introduce a new “Guidance Service” giving free and impartial guidance to everyone with pensions funds in excess of £30,000 (above the trivial commutation rules). The Financial Conduct Authority (FCA) will be responsible for standards, guidance and monitoring. There will be a levy imposed on certain firms regulated by the FCA to meet the costs.
  • Transfers will be permitted from private sector AND funded public service defined benefit schemes to defined contribution schemes; subject to certain safeguards and the member must take advice from a professional financial adviser who is independent from the defined benefit scheme and authorised by the FCA.
  • Trivial Commutation to be available on reaching the minimum age for accessing pensions of 55.

For more information, contact us.

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