Focus 93 – Pension reforms announced in Budget 2014

Today’s Budget saw major announcements of changes to the way people can take defined contribution benefits at retirement.

From 27th March 2014

  • Flexible drawdown minimum income requirement reduced to £12,000 from £20,000
  • Maximum capped drawdown income increased from 120% to 150% of max Gad rate.
  • Trivial commutation increases from £18,000 to £30,000
  • The size of small pension pots that can be taken as a lump sum is increasing to £10,000 from £2,000. 3 pots of this size will be able to be taken by an individual, as increase from 2

From April 2015

  • No requirement to purchase a pensions income at retirement
  • 25% pension commencement lump sum remains with residual fund available to be withdrawn in full at marginal rate of tax.
  • No minimum income requirement

Other proposals

  • Review of death benefit lump sum tax charges (currently 55%)
  • Consultation on dependents pensions
  • Increase in minimum pension age to link to state pension age in 2028, which will be 57 at that point.
  • Levy on pension providers to pay for face to face advice for all at retirement.

More detail will come out over the following days and we will endeavour to update any major changes.