Pension changes

A number of changes to pension regime came into effect on 6 April.

Individuals over the age of 55 now have access to their defined contribution (DC) pension savings in full. Employees can take their savings as cash, enter drawdown or purchase an annuity. The tax-free lump sum of up to 25% of a fund will remain available, with any remaining amount taxed as income.

The government guidance guarantee service Pension Wise is up and running and members of DC schemes now have access to free and impartial guidance on their approach to retirement.

Transfers from defined benefit (DB) schemes to DC schemes will continue to be allowed, but will exclude pensions that are already in payment. Transfers from DB to DC schemes will be restricted for members of unfunded public sector schemes, although they may be allowed to transfer in limited circumstances.

An income tax exemption for payments made for advice on transfers out of DB schemes to DC has also been introduced. If an individual dies before the age of 75, they can now pass on their unused DC pension pot free of income tax. 

Beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed annuity can now receive any future payments from such policies free of income tax.

The basic state pension for a single person increased by £2.95 a week to £115.95.

www.employeebenefits.co.uk/compliance/legislation-and-tax-changes-that-took-effect-from-6-april-2015/106501.article