With six months to go until the biggest pensions changes in a generation, Origen Financial Services announce the six key changes taking effect from April 2015.
Farnborough, Hampshire -- (SBWIRE) -- 11/07/2014 -- The first change, Flexi-Access Drawdown (FAD) allows all those over 55 to drawdown as much as they wish from their pension fund.
The second change reported by Origen allows up to 100% of a pension pot to be withdrawn - known as Uncrystallised Funds Pension Lump Sum (UFPLS). This allows those over age 55 to withdraw some or all of their pension directly from their current scheme without disturbing other pension funds. The money withdrawn would be 25% tax free and 75% liable to Income Tax.
Changes are being introduced to the annual allowances with the new Money Purchase Annual Allowance (MPAA), creating a new threshold that restricts the amount of pension saving for those who have taken income from a FAD or taken a UFPLS. The annual allowance is reduced from £40,000 to £10,000 per tax year. This is less attractive than the current rules for drawdown and may catch out those who withdraw one or more pension pots while continuing to work and accruing further pension benefits.
Origen report the forth key change as a restriction on defined benefit (DB) transfers. In future, DB transfers will only be allowed from ‘funded’ pension schemes. (Private final salary schemes e.g. Tesco and HSBC) and will not be allowed from Public Sector schemes such as the NHS.
Many DB pensioners will have the flexibility to transfer to the new arrangements. Origen Financial Services announced that their starting point for advice is that transferring out of a DB scheme is not in the member’s best interest. Indeed post April 2015, the Financial Conduct Authority has mandated that these transfers will require regulated financial advice.
The fifth change is a relaxation on annuity payments with some lifetime annuity payment restrictions being remove (i.e. the 10 year limit on a guarantee period being uncapped) all of which will drive a new wave of annuity and retirement income products.
The final change reported by Origen is the removal of the 55% death tax charge. For those who die before age 75 death benefits will be tax free, for those who die later they will be taxed at the beneficiary’s rate of Income Tax.
Origen Financial Services is a trading name used by Origen Financial Services Limited who are authorised and regulated by the Financial Conduct Authority. Our Registration Number is 192666. Our Registered Office is: Infor House, 1 Lakeside Road, Farnborough, Hampshire, GU14 6XP. Tel: 0844 209 3000 Fax: 0844 209 300
About Origen Financial Services
-Origen Financial Services is one of the UK’s largest financial advisory businesses with over 230 employees that are either home based or located in offices nationwide. Over 350,000 private clients, 900 small and medium sized corporate clients and some of the UL’s largest organisations retain us as their adviser.
-We are an advice led business which focuses on building strong partnerships with clients, treating them fairly in the delivery of our advice and providing excellent service.
-Origen Financial Services is part of Aegon.
-In the UK, Aegon offers retirement, workplace savings and protection solutions to around two million customers and employs approximately 2,100 staff. Aegon UK’s revenue generating investments totalled £58 billion as at 30 June 2014.
-As an international life insurance, pensions and asset management company based in The Hague, Aegon has businesses in over twenty markets in the Americas, Europe and Asia. Aegon companies employ over 27,000 people and have millions of customers across the globe as at 30 June 2014.
Further information: http://www.aegon.com
-The value of an investment can fall as well as rise and is not guaranteed. Investors may get back less than originally invested.
-This information is based on our understanding of current legislation, taxation law and HM Revenue & Customs practice, which may change. The value of any tax relief depends on the individual circumstances of the investor.
-Aegon is the Lead Partner of British Tennis.