This is Money. When Stuart Herd's widowed father, William, remarried at 67, Stuart was delighted.
He'd feared his father would live out the rest of his days alone, after the death of his wife, Freda, in 1986. But, two years later, William had met Dorothy on a dating website, and they married in a quiet ceremony at a register office in Clacton-on-Sea, Essex. Stuart says he has not received a penny of his father's £300,000 estate - instead, everything has ended up with Dorothy's son. The Pensions Regulator. This is a guide to help people understand pensions terminology generally.
The regulator also issues technical and practitioner guidance which contain glossaries of the technical and legal terms used in them. If there is any difference between the terms used here and similar terms explained in those glossaries, the glossary definitions attached to the relevant guidance should be used. Association of British Insurers. The ABI represents the collective interests of the UK's insurance industry, including all the major pension providers. On its website the ABI sets out its role as follows: "The Association speaks out on issues of common interest; helps to inform and participate in debates on public policy issues; and also acts as an advocate for high standards of customer service in the insurance industry. " It also provides an advisory service on corporate governance to those of its members who are active shareholders. absolute return.
Personal pension scheme. A personal pension scheme (PPS), sometimes called a personal pension plan (PPP), is a UK tax-privileged individual investment vehicle, with the primary purpose of building a capital sum to provide retirement benefits, although it will usually also provide death benefits.
These plans first became available on 1 July 1988 and replaced retirement annuity plans. Both the individual can contribute as well as their employer. Benefits can be taken at any time after age 55 if the plan rules allow, or earlier in the case of ill health. In the past, legislation required benefits to be taken before age 75, and many plans still contain this restriction. Part of the fund (usually 25%) may be taken as a lump sum at retirement. Insured personal pensions with charges capped at a low level, and which satisfy certain other conditions, are known as stakeholder pension. Contributions Contributions to a PPS can be made either from the individual or from an employer. Pru Adviser Pension facts and planning. Pensions and retirement. The pension changes: video guide - What the pension changes mean for you - Retirement. Pensions, and the way people can access the money in them, are changing radically.
The new measures from April 2015 represent a complete shake-up of the UK's pensions system, giving people much more control over their pension savings than before. Which? Can help you to navigate this complex area. Our video summarises the changes, and further down, we explain more about what they mean for you, and your options.
Defined contribution pension schemes. Your pension lump sum options. Lifetime allowance for pension savings. Tax relief on pension contributions. Salary sacrifice. Arrange an annuity - Income options for your pension under the 2015 rules - Retirement. Most people with a pension pot have had to turn it into an annuity when they retire.
The annuity provider guarantees to give a set level of income for the rest of the person's lifetime. You currently can't go back after making the choice (although this may change from April 2016), but other options haven’t really been cost-effective for the majority of retirees, anyway. After April 2015, major pension changes will still allow you to turn your money into an annuity, but the government is proposing making annuities more flexible than previously. Can I take my entire pension fund at retirement? - Income options for your pension under the 2015 rules - Retirement. A major part of the April 2015 rule changes is that it is now possible that you will be able to take your entire pension fund in one go, or a few lump sums over a number of years.
However, it’s not that straightforward and there are considerable tax implications in going for this option. Which? Details how this will work. Pensions-guidance-guarantee-general-questions-396644.pdf. Pension-guidance-guarantee. Paper009-Case-for-Scheme-Pension.pdf. What is Commutation? Trivial_commutation_detailed_SPOT008_V1.4.pdf. Small lump sums. There are a number of scenarios, for all scheme types, where it is possible to take a lump sum if a plan value is no more than £10,000 on the grounds of triviality.
Before 27 March the plan value is no more than £2,000. You may also find the following articles useful: The Registered Pension Schemes (Authorised Payments) Regulations 2009 came into force on 1 June 2009 and affects payments made after 1 December 2009. They allow certain payments made by a scheme to be authorised payments which had previously been unauthorised payments. They include such things as payments made as a result of a genuine error but also include certain commutation payments, the most important of which are described below. Relevant accretion You will probably be asking yourself 'what does relevant accretion mean? ' Benefit Crystallisation Event? What Benefit Crystallisation Event? Written by John Haley, Technical Consultant, AXA Wealth, June 2013 Since the pension simplification (!?!)
Rules were introduced in April 2006, certain events cause pension funds to be measured against the Standard Lifetime Allowance (SLA). If the amount crystallised exceeds the available SLA, then the excess fund will be subject to a tax charge, which is 55% if the excess fund is taken as a lump sum, or 25% if used to provide an income - which is then subsequently subject to income tax. There are eleven different types of Benefit Crystallisation Event (BCE) that measure pension funds against the SLA following certain events. Defined contribution: AVCs and FSAVCs. There are two main versions of AVC schemes: A defined contribution AVC scheme allows you to pay additional contributions into the scheme.
These contributions are invested, allowing you to commence drawing additional pension benefits from the age of 55. The value of these benefits will depend on how much has been paid into the AVC, the length of time that each contribution has been invested and investment growth over this period. A defined benefit AVC (or added years AVC) allows you to buy additional months or years of membership in the employer’s defined benefit pension scheme.
Pension savings annual allowance calculator - introduction. From 6 April 2014 the annual allowance for tax relief on pension savings in a registered pension scheme was reduced to £40,000.
The Pensions Advisory Service. This means that you will stop building up pension benefits, although any benefits that you’ve built up already remain yours. You may also lose any other benefits that the scheme provides, such as life cover. Your pension provider or scheme administrator can tell you more. If you leave your employer, you will also leave their workplace pension scheme, although if you have a personal pension, stakeholder pension or self-invested personal pension scheme, you can normally continue contributing to this (although you will not receive any further contributions from your ex-employer).
Lifetime Allowance - facts. From 6 April 2006, the pensions rules changed. In particular the rules around the maximum benefits that were payable under UK tax approved pension schemes were fundamentally changed. There is no limit on the benefits an individual can get - or 'crystallise' - from a registered pension schemes. However, there is an overall limit of tax privileged pensions funds a member can accrue - the 'Lifetime Allowance' (LTA). Each time a member takes benefits, dies and at some other times the amount of LTA they have used is tested.
When the members' benefits, along with any other benefits they have taken, is over the LTA, a 'Lifetime allowance charge' is applied to the value in excess of the LTA. Primary or enhanced lifetime allowance protection. These are protections for benefits earned up to 5 April 2006 in respect of those high earners affected by the introduction of the lifetime allowance from 6 April 2006.
Under HM Revenue and Customs rules, if the value of your pension benefits at 5 April 2006 was more than the 2006/2007 lifetime allowance of £1.5million and you have registered for primary protection, you have an individual lifetime allowance based on how much your benefits at 5 April 2006 exceeded the value of the 2006/2007 standard lifetime allowance. Your individual lifetime allowance increases at the same rate as the standard lifetime allowance.
From 6 April 2011 the general exemption from the annual allowance for the relatively small number of scheme members who applied to HMRC for, and received, an enhanced protection certificate has ceased. Early retirement - effect on your pension. If you retire early, or stop work due to redundancy, ill-health or other reasons, your State Pension and other pensions you're entitled to may be affected. You need to know all your pension options to make sure you'll have enough to live on in retirement. Pensions and retirement planning. Pension calculator & retirement savings - MoneySavingExpert. Fancy an easy pay rise? 20150211_Newsletter_66_February_2015.pdf. Tax on a private pension you inherit. The basic State Pension. The new State Pension. Taxation of Pensions Bill: briefing note. Clause 1 of the bill introduces the schedule.
Personal and stakeholder pensions. Tax on your private pension contributions. Rates and allowances: Income Tax. Income Tax rates and Personal Allowances. How much Income Tax you pay in each tax year depends on: how much of your income is above your Personal Allowance how much of this falls within each tax band. Tax when you get a pension. Registered Pension Schemes Manual (RPSM) Salary sacrifice and the effects on PAYE - Detailed guidance. Money-purchase-benefits-guidance.pdf. Death Benefits - facts.
Lump sum death benefits PENS6656.PDF. What you need to know.