- Trivial commutation - lump sum increases to £30,000
The trivial commutation limit will increase from £18,000 to £30,000. This means that a member can, from age 55, take all his pension benefit as a lump sum provided that his total savings in registered pension schemes do not exceed £30,000.
- Small lump sums - payments of up to £10,000 allowed
Current legislation allows lump sums of up to £2,000 to be paid as authorised payments, regardless of the value of other pension savings, in certain circumstances. The limit for all these payments will be increased to £10,000. These payments will continue to be subject to taxation.
- Changes to drawdown rules
Individuals taking capped drawdown are currently restricted to taking 120 per cent of the value of an "equivalent annuity" each year. This is to be increased to 150 per cent for all drawdown pension years starting on or after 27 March 2014. This means some individuals may not be able to take advantage of this for a number of months, depending on the date on which they were first entitled to a drawdown pension.
Additionally the minimum secured pension required to enter into flexible drawdown is reduced to £12,000 from £20,000 per annum.
Whilst these increases in flexibility are welcome, they increase the need to seek independent financial advice and exercise caution when considering retirement planning.
Please contact Ward Williams Financial Services on 01932 830664, or visit us at www.wardwilliamsfs.co.uk for more information.