Category: Pension

New Powers of Pension Regulator There were few changes to the pension scheme Act few weeks ago. The new Pensions Scheme Act received Royal Assent on 11 February 2021.

The Act has been described by government as “the biggest shake-up of UK pensions for decades”. The new Act will provide for enhanced powers for the Pension Regulator, including the power to impose civil penalties of up to £1 million and three new criminal offences.

https://www.legislation.gov.uk/ukpga/2021/1/contents/enacted/data.htm

One of new criminal offences, that could result in up to seven years in prison, will target bosses who run pension schemes into the ground, or plunder pots to line their own pockets. This is expected to strengthen the regulators’ powers to take efficient and timely actions to protect members’ hard-earned savings.

The legislation also introduces a new pensions dashboard creating one single platform to access and review pension pots, and the creation of new style collective defined contribution (CDC) schemes. CDCs have the potential to increase returns for millions, whilst being more sustainable for both workers and employers.

The Act also aims to ensure that pensions help with climate change governance by moving towards a net zero future through climate risk reporting.

The measures in the Act will come into force at different times as secondary legislation is introduced.

If you are looking to know more this new and related laws; feel free to book a free consultation.

The annual allowance for tax relief on pensions has been fixed at £40,000 since 6 April 2014. The annual allowance is further reduced for high earners. Since 6 April 2020, the tapered annual allowance increased from £150,000 to £240,000.

https://www.gov.uk/tax-on-your-private-pension

This means that anyone with income below £240,000 is no longer affected by the tapered annual allowance rules. Those earning over £240,000 will begin to see their £40,000 annual allowance tapered. For every complete £2 income exceeds £240,000 the annual allowance is reduced by £1. The annual allowance can also be lower if the taxpayer flexibly accessed their pension pot.

There is a three year carry forward rule that allows taxpayers to carry forward unused annual allowance from the last three tax years if they have made pension savings in those years. The calculation of the exact amount of unused annual allowance that can be carried forward can be complicated especially if you are subject to the tapered annual allowance.

There is also a pensions lifetime allowance that needs to be considered. The lifetime allowance limit is currently £1,073,100.

or most workplace and personal pensions, how much you get depends on:

• the amount you’ve paid in
• how well the pension fund’s investments have done
• your age – and sometimes your health – when you start taking your pension pot