14th May 2018

Prudential: Has it really been 12 years already?

Pensions simplification promised to remove the complex rules and multiple maximum benefit calculation regimes that existed prior to 6 April 2006. So how has our relationship with the changes that were introduced developed over the last 12 years? Jacqueline Clezy, Technical Manager at Prudential explores. 

I recently celebrated my 12^thwedding anniversary. In that time my husband has learned never to trust my sense of direction which invariably leads us to a dead end. On the other hand, he couldn’t find the washing machine even if I left a trail of sweeties. When I cook for him he knows to tell me it tastes delicious and it’s always his turn to put the bins out. Learning these foibles early means we’ve enjoyed 12 years of stereotypical marital bliss.

Working in the technical helpline we’re aware that pensions simplification removed some very complex rules and replaced them with some new rules for tax relief, annual allowance and lifetime allowance, which even today are still causing confusion. There has been much tinkering since 2006. However, some of the rules that have not altered since then are still misunderstood.

Mark Devlin wrote about the separate rules for tax relief (January)and annual allowance (February). These are a good source of facts and will help you with planning angles. However, based on the conversations we have daily through the helpline, I want to dispel some myths that would have you straying down the wrong path.

This article is part of the Oracle Technical April 2018

Tax relief

We know that a member can receive tax relief on contributions up to the higher of £3,600 gross or 100% of relevant earnings in the tax year they pay the contribution. When you are working out the maximum an individual can contribute, you must take into account any other personalcontributions they pay, eg to an occupational scheme (includes defined benefit and CARE schemes and this would be the monetary amount), an auto-enrolment scheme, any AVC scheme, personal pension plan, S226 contributions etc.

Read the full article here.

Pensions, Tax, Trust & ISA