Retiree/At Retirement: The Pension Landscape in 2016
Posted by siteadmin on Tuesday 22nd of March 2016.
There have been many changes to pensions in the past few years, with another significant set of reforms about to take effect. These include:
- Three reductions in the standard lifetime allowance bring it down from £1.8m in 2011/12 to £1.25m now and £1m from 6 April 2016. This allowance effectively sets a tax-efficient ceiling for the value of pension benefits.
- Further increases to State Pension Age (SPA), both legislated for and planned. For women, SPA is now about 63.
- New rules, which have given much greater flexibility in drawing benefits from money purchase schemes, started on 6 April 2015 and have encouraged many people to turn their entire pension pot into (mostly taxable) cash. The new flexibility was accompanied by more generous tax treatment of death benefits, further enhanced in the Budget, adding to the opportunities pensions offer for estate planning.
- The new single-tier state pension starts on 6 April 2016. While it will not affect you if you reach SPA before then, you now have the opportunity to top up your pre-April 2016 state pension by making new Class 3A National Insurance contributions before the 6 April 2017.