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FINANCE Autumn Statement And Pensions


When you read this article I hope that you will all have had a great Christmas and are looking forward to a healthy and prosperous New Year.


As I write it, I am still digesting the contents of the Chancellors Autumn Statement where he extended UK Austerity until 2017/18 while providing no real strategy for fuelling economic growth, so here’s to a prosperous New Year!


The Chancellor reformed the pension contribution rules in 2010 and indicated that the new rules would be in place for many years. However, under pressure from his coalition partners he has once again tinkered with the rules to raise money from the better off.


In his autumn statement the Chancellor announced the following changes:


•The lifetime allowance (the amount you can save in your pension without tax penalties will reduce from £1.5 million to £1.25 million with effect from 6 April 2014. The Government will allow people to apply to protect their pension pot after this legislation comes into force, which is expected to be summer 2013.


42 January 2013


One of the possible consequences of the changes made by the Chancellor is that companies may review whether they will continue to provide final salary pension schemes. According to the Daily Telegraph “pensions experts said they had been contacted by companies ranging from multi-nationals to smaller firms who were reviewing their arrangement”.


•The annual allowance (the tax-relieved amount you and your employer can together pay into pensions) will reduce from £50,000 to £40,000 with effect from 6 April 2014.


While it appears that there is plenty of time to plan for the changes the peculiar nature of pension rules means that some savers may be caught by the reduction to £40,000 as early as May next year.


If you are seeking pension advice in London then our office in Barnet is there to help. Our office manager Clive Gadsden and colleague Jim Quinn are both qualified to provide pension advice.


Geoff Newman


Raj Mody, the head of pensions consulting at PwC, said: “The proposed changes to the pension tax thresholds mean that for many employers a much larger number of employees will now be affected. Combined with the volume of other pension regulatory changes they have to deal with, these latest announcements become another catalyst to review whether to close Defined Benefit schemes. Companies are experiencing fatigue with constant pensions’ changes and so there’s a desire to close down their future exposure once and for all.”


Organisations representing businesses are also understood to be preparing to warn the Treasury about the wider dangers of the pension tax raid. The Institute of Directors believes that the “latest in a long line of tax grabs” means that “public confidence in pensions has been all but wiped out”.


If you own or manage a business and need pension advice call our Barnet office on 020 8447 5592 and either Clive or Jim will be able to assist.


Geoff Newman, Director Lyndhurst Financial Management Authorised and Regulated by the FSA.


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