What are the recent changes to pensions?

What are the recent changes to pensions?

income drawdown from pension providers may involve charges and minimum withdrawals, which may affect individual tax situations; these details must be checked with your pension provider.  

The first 25% of pension pots may be taken tax free but there is still a potential tax trap faced by those cashing in.  If you cash in large amounts from your pension pot, HMRC will want to know if this extra income pushes you into a higher tax bracket. 

The annual allowance - the maximum you can save into a pension in a year, taking into account your own plus your employer's contributions - is £40,000, but from April 2016 a tapered allowance came into effect for high earners.  The allowance reduces by £1 for every £2 that income exceeds £150,000, up to a maximum reduction of £30,000. 

According to the Telegraph, “more families turn to pensions to avoid death duties”. They describe millions of pounds which are being passed down the generations – and bypassing inheritance tax – as savers exploit a lesser-known advantage of the “pension freedoms”.
This set of reforms, applying from April 2015, made it easier to pass unused pension assets from one generation to another. New figures from the City regulator reveal the extent to which families are now benefiting from this.  Read more

 

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