Pensions going forward
Last year was obviously a significant year for pensions. Alterations surrounding how pensions may be taken at retirement, and the way death is taxed on pensions is to be made better were declared. The intention is for these new policies to be live after April 2015.
For any retirement saver, the environment has evolved and should carry on doing so, this will have an effect on how many plan for the future.
A key outcome will probably be the arrival of a fresh product range to support the latest flexibility around ways to take your pension at retirement. Annuities, historically the first choice for the majority of retirement savers, now appear to have run their course. Nevertheless their most attractive characteristic, a safe income for life, is one thing a lot of people entering retirement will continue to seek out. Pension suppliers as well as other investment organisations will, as a result, be looking to bring a fresh safe income plan to the market. Time will tell how this develops.
The more significant freedom may possibly, at some point, come at a cost, so the general election will prove interesting. A new government could result in an alternative opinion of the fantastic tax reliefs retirement savers presently benefit from. An initial budget by a future government may well see a lowering of the income tax benefits offered, this has been suggested for a while now.
There’s a complex partnership between the government and pensions, made worse due to government’s own extended retirement liabilities as they are UK’s most significant employer. They are liable for both state retirement benefits as well as the Public Service scheme for Teachers, Police etc. These are a weighty load on the government’s resources, immediately and over the longer term. Like it or not, the move to private sector arrangements are increasing. An announcement that might begin to means test pensions inside state backed pensions might be a significant, but not so much of a surprise.
Chances are if a new government do anything significant that will be unpopular it will likely be within the initial few months following the their election. It could be beneficial to maximise any opportunity surrounding pension planning, in advance of the initial budget of a subsequent government.
April 2015 will be the month that the Public Services pension schemes start to see the career average earnings approach used on their earnings calculations. This is an alteration created by the Public Service Pensions Act 2013 which is an element of the broader range of alterations indicating the expanding cost problem.
Greater contributions for individuals in the scheme already are in place. Further statements around even greater contributions in the future and extended minimum pension dates wouldn’t be a shock. Considering the huge steps which need to be implemented to lessen future government’s financial obligations, there is little option.