Pension Services
Pension Tax Relief Limits
Update
November 2011
Pension Services
Contents
• Summary of changes
• Who is affected
• Payment of charges
• Actions to take
Pension Services
Annual Allowance
• The amount your pension savings can increase in a year without
becoming liable for a tax charge
• Reduced to £50k from 6th April 2011 (was £255k)
• Multiplier factor = x16 (was 10) pension + cash sum
• Growth excess subject to tax at marginal income tax year
• Carry Forward mechanisms for previous 3 years unused allowances
• Money Purchase AVCs = total of the actual contributions paid, not the
investment performance or AVC fund value
Pension Services
Who could be affected?
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Combination of high salary and long service
Large pay rise, receive allowance, award
Promotion to a higher paid role
Limited scope to use previous unused allowances
Accruing pension at a higher rate than scheme accrual,
paying Added Years AVC
• Currently paying Money Purchase AVCs
• Augmentation of retirement benefits
• Deferred benefits NOT included in AA calculations
Pension Services
How are charges paid?
• Personal taxation matter and member’s responsibility
• Annual self-assessment tax return
• “Pension Saving Statement” – from the pension scheme
• Required by law – issue by Oct 2013
• Excess over £50k charged at highest marginal rate
• “Scheme Pays” – charges in excess of £2K deducted from benefits to
cover the payment.
Pension Services
Lifetime Allowance (1)
• Overall maximum amount of your pension savings you can
have without incurring a tax charge
• Reduced to £1.5m from 6th April 2012 (was £1.8m)
• Level fixed until tax year 2015/2016 and not expected to
increase with inflation
• Multiplier factor = x20 (unchanged) pension + cash sum
Pension Services
Lifetime Allowance (2)
• Excess charge paid at Retirement
• Charged at 55% if applied to Lump sum
• Charged at 25% on pension income (+ income tax
on pension income)
Pension Services
Fixed Protection
• Retain higher LTA of up to £1.8m
• Members who had based their retirement projections on
previous limit of £1.8m
• Applications to HMRC by 5th April 2012 – Form APSS227
• No future accrual in any pension arrangement
• Scheme options if electing Fixed Protection
Pension Services
Actions to take
• Review of personal circumstances
- All pension arrangements + AVCs
- Look ahead to April 2012
• Read scheme documents, information sources
- Familiarise with scheme options, go to their websites
• Independent Financial Advice
- UCL can provide information but not offer financial advice
• Further news / updates
- We will update you as it becomes available
Pension Services
Where to find more
information
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Websites
USS: www.uss.co.uk
NHS: www.nhsbsa.nhs.uk/pensions
UCL Pension Services: www.ucl.ac.uk/hr/pensions
Tax Relief Limits page +
slides from presentations
Pension Services
Further presentations
2012
th
8 February @ 12.30pm
th
15 February @ 4.00pm
Pension Services
Questions?
• From the floor
• Talk to us after the presentation
• Submit email to: pensions@ucl.ac.uk
Or telephone: 0207 679 1999 (x41999)