Lifetime or annual allowance review
It is estimated that potentially over 360,000 people could be affected by the new pensions lifetime allowance (LTA) changes.
If you are one of these people, you will need to act fast, and we recommend that you contact Bartholomew Hawkins immediately or you could miss out on the opportunity to protect yourself from an unnecessary tax charge. If you haven’t already obtained the information you need by the end of this February, you run a real risk of missing the decision deadline.
DO YOU NEED TO ACT QUICKLY?
The LTA will reduce to £1.25m on 6 April 2014, so you now have just a few months to make a decision. It applies to an individual’s total pension worth, so you will have to act quickly to gather details of current values and growth projections for any private pensions, including SIPPs, as well as any workplace money purchase or defined benefit schemes.
Pension savers who don’t check to see if they will be affected and who exceed the LTA will expose their pension savings to a 55% tax charge – leading to a high unexpected tax bill.
I HAVE NOT TAKEN ANY ACTION, BUT DO I STILL NEED TO REVIEW MY PENSIONS?
If you have not sought the appropriate advice regarding the reduction in the lifetime allowance, you may still need to act to avoid any future problems.
Although, you may not be affected by the lifetime allowance changes now, you may be affected in the near future. The growth on your existing benefits and any future contributions may put you in a position where you breach the new limit. Without the correct calculations you could be continuing to accrue additional benefits and creating a tax bill in the near future.
WHERE CAN BARTHOLOMEW HAWKINS HELP?
We have worked with a large number of clients who have or may have been potentially affected by the lifetime allowance issues.
We produce a report that identifies your current position, the position at retirement assuming further pension contributions and the position at retirement assuming no further pension contributions. We will then make recommendations as to what (if any) planning needs to be implemented.
Even if your pensions are below the £1.25m new lifetime allowance limit it may worth getting in touch. Typically, if you have pension savings of over £700,000 with contributions still being paid you may be affected.
Source: [1] www.hmrc.gov.uk/budget2013/tiin-1046.pdf
