News: January 2013
Pensions tax relief
The attractions of pension scheme enhancement are clear, especially if the employer meets some or even all of the contributions, but there are issues as follows:
- Little chance of a final salary scheme being available
- Poor investment performance
- High charges reducing the fund value over a number of years
- Ever lower annuity rates
The Autumn Statement has mixed messages on the tax structure. The bad news is that the annual maximum you can contribute is going down from £50,000 to £40,000, although this will not be until 2014/15. The lifetime allowance is a maximum value of your pension plan, which if exceeded creates a nasty tax charge of 55%. This allowance reduces to £1.25 million from the current £1.5 million, again as from 2014/15.