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Pensions and politics

Only recently have this Governments radical changes to pensions come into effect and many who consult Enable’s IFA’s are still trying to work out the best course of action for their pensions but already new policies loom on the horizon. Both of the main parties are talking about limiting pension benefits for the super-rich in their manifestos but the worry is that what’s being proposed could begin to threaten pension decisions across the board.

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George Osborne’s March 2014 Budget ushered in pensions changes that saw responsible self-provision savers being rewarded with freedom and choice. But in last month’s Budget in the run-up to the election pension savings appear to be under attack again, the “lifetime allowance”, which limits the total sum anyone can amass within a pension during their life has been earmarked to change from April 2016 so savers whose pension pots rise above that £1m cap will face 55 per cent tax when the money is taken out. 

And to put it in context £1m may seem like a lot but at age 65 £1m will buy a lifetime income starting at just £27,200, (based on a competitive annuity quote today, where the income is set to rise by 3 per cent per year and where your husband or wife gets half on your death). For many earners that level of play out would mean a drastic cut in income. These kinds of return on £1m, is partly why, under the new pension freedoms savers will be trying to do better managing their capital themselves.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 – Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.

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