UK Pensions Proposed Changes for April 2015
May 15th 2014, 9:01 am
#1
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UK Pensions Proposed Changes for April 2015
1 . The UK Government recently announced that the following 2 main changes to UK Pensions will come into affect in April 2015:
a. Public Defined Benefit Schemes (final salary schemes) such as Police, NHS, Teachers etc will not be allowed to be transferred from April 2105.
b. You will no longer have to convert your pension funds into an ongoing annuity as you will be allowed to to take them as a lump sum from age 55. However, 25 % will be tax free whilst the remaining amount will be taxed at your marginal rates.
2. The outcome of the above are as follows:
a. You will not be able to transfer your public defined benefits scheme from April 2015. This means the funds must have been transfer before that date. Given the rush to do and sometime slowness of the transfers it is best to get things rolling as soon as possible to guarantee your funds being transferred over.
b. Whilst you can access funds from age 55 the issue is also one of tax. By transferring the funds over you move it into a tax free environment at age 60 years onwards in Australia. If you have a large amount of funds and take as a lump sum in the Uk you can wear a large amount of UK Tax by doing so and reduce your pension funds considerably.
c. If you have transferred funds already to Australia and you meet the conditions of release then technically you should be able to access the funds without the current restrictions imposed of by the UK if you are aged 55 and above.
The above are only proposed changes but it is clear that if you are moving funds over you need to get things going well April 2015!!!
Using a Professional will help ensure you meet time frames if your fund is a Public Defined benefit Scheme.
Cheers John
a. Public Defined Benefit Schemes (final salary schemes) such as Police, NHS, Teachers etc will not be allowed to be transferred from April 2105.
b. You will no longer have to convert your pension funds into an ongoing annuity as you will be allowed to to take them as a lump sum from age 55. However, 25 % will be tax free whilst the remaining amount will be taxed at your marginal rates.
2. The outcome of the above are as follows:
a. You will not be able to transfer your public defined benefits scheme from April 2015. This means the funds must have been transfer before that date. Given the rush to do and sometime slowness of the transfers it is best to get things rolling as soon as possible to guarantee your funds being transferred over.
b. Whilst you can access funds from age 55 the issue is also one of tax. By transferring the funds over you move it into a tax free environment at age 60 years onwards in Australia. If you have a large amount of funds and take as a lump sum in the Uk you can wear a large amount of UK Tax by doing so and reduce your pension funds considerably.
c. If you have transferred funds already to Australia and you meet the conditions of release then technically you should be able to access the funds without the current restrictions imposed of by the UK if you are aged 55 and above.
The above are only proposed changes but it is clear that if you are moving funds over you need to get things going well April 2015!!!
Using a Professional will help ensure you meet time frames if your fund is a Public Defined benefit Scheme.
Cheers John
Jun 19th 2014, 10:55 am
#2
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Re: UK Pensions Proposed Changes for April 2015
Progress update on proposed Changes to UK Pension Transfers
The proposed changes to UK Public Define benefit Schemes such as NHS Teachers and Police etc to not be allowed to be transferred from April 2015 has now finished the consultation stage. It is now being reviewed by the Government who will draft the proposed changes. Once they have been made known we can provide a further up date on things
Again, if you have these types of pension funds and wish to transfer them , then do not leave it for too long.
Our firm can undertake the transfers for you - contact me via the POC in the signature block below.
Cheers JOHN
The proposed changes to UK Public Define benefit Schemes such as NHS Teachers and Police etc to not be allowed to be transferred from April 2015 has now finished the consultation stage. It is now being reviewed by the Government who will draft the proposed changes. Once they have been made known we can provide a further up date on things
Again, if you have these types of pension funds and wish to transfer them , then do not leave it for too long.
Our firm can undertake the transfers for you - contact me via the POC in the signature block below.
Cheers JOHN
Jul 22nd 2014, 11:42 am
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ACCESSING YOUR UK PENSIONS AND TRANSFERS FROM APRIL 2015
1. On 21 July 2015 after a consultation period the UK Government announced the final outcomes on proposed changes announced in the 2014 Budget. Draft legislation will be further reviewed in August 2014 and tabled in Parliament in Autumn 2014.
2. In a nut shell it can be summarised as follows:
a. You will be able to access your funds from aged 55 as you wish with 25% still remaining tax free and the remainder being at your marginal tax rate. This is from a Defined Contribution Scheme and not from Private or Public Defined Benefit Schemes.
b. Private Defined Benefit schemes will still be allowed to be transferred to Defined Contribution Schemes.
c. Funded Public Defined Benefit Schemes such as the Local Government Pension Scheme will still be allowed to be transferred into Defined Contribution Schemes. However, Unfunded Public Defined Benefit Schemes (the vast majority of public sector funds) will not be allowed to be transferred from April 2015.
3. A further explanation of the reforms:
a. You can now take your pension how you like.
From April 2015, no matter how much you decide to take out from your pension after retirement, withdrawals from your pension will be treated as income; the amount of tax you will pay on what you withdraw will depend on the amount of other income you have in that year. This is instead of being taxed 55% for full withdrawal, as it has been previously.
b. 25% of your pension pot will remain completely tax-free, as it was before. You’ll be able to access 25% of your pot in one go without paying any tax.
c. This applies just to people with ‘defined contribution’ pensions. This is a type of pension also known as a ‘money purchase’ scheme.
This is when the money you and your employer pay in is invested by a pension provider chosen by your employers. The amount you get when you retire usually depends on how much has been paid in and how well the investment has done.
d. People who have a ‘defined benefit’ scheme will benefit too.
A ‘defined benefit’ pension is typically a promise of a certain level of pension in retirement which is linked to your salary. It has been announced that people in the private sector or in a funded public sector scheme will still be able to transfer from a defined benefit pension scheme to a defined contribution one if they want to, meaning they can benefit from the changes.
5. Everyone who will be able to take advantage of the new reforms will be able to access free and impartial guidance. This will help people make confident and informed choices on how they put their pension savings to best use.
This guidance will be available through a number of different channels - via an online tool, over the phone, or face to face. Individuals will be able to choose the channel, or mix of channels, that they find most convenient.
It will be entirely impartial, so won’t be given by anyone who could be trying to sell you a product.
6. Your pension provider or scheme will be required to tell you about the guidance and how to access it. Accessing the guidance will be arranged by your pension provider, who will be required to tell you about it.
7. The changes will come into effect from April 2015
If you are over the age of 55, or will be from April 2015, you will be able to take advantage of the new system from then. If you’re younger than 55 then you will be able to take advantage of the new system when you do reach 55.
8. The Government continues to believe that transfers from unfunded public service defined benefit schemes should be banned, in order to protect the Exchequer and taxpayers. Transfers from funded public service defined benefit to defined contribution schemes will be permitted, and safeguards similar to those in the private sector will be introduced where appropriate.
9. Detailed Summary on Proposed Changes can be found at:
https://www.gov.uk/government/upload...work_print.pdf
Summary
The government intention has been well received in providing further flexibility in accessing your Pension funds; however, those with Unfunded Public Defined Benefit Schemes will not be able to transfer from April 2015. Therefore, those wishing to do so have a limited period of time in which to commence their transfers to either another UK fund or to move it outside the UK.
Should you need further assistance in either understanding the new rules
and / or facilitating a UK Pension Transfer to an Offshore Pensions Scheme such as an Australian Super Fund then please do not hesitate to contact us on 08 93758503 or via email [email protected]
2. In a nut shell it can be summarised as follows:
a. You will be able to access your funds from aged 55 as you wish with 25% still remaining tax free and the remainder being at your marginal tax rate. This is from a Defined Contribution Scheme and not from Private or Public Defined Benefit Schemes.
b. Private Defined Benefit schemes will still be allowed to be transferred to Defined Contribution Schemes.
c. Funded Public Defined Benefit Schemes such as the Local Government Pension Scheme will still be allowed to be transferred into Defined Contribution Schemes. However, Unfunded Public Defined Benefit Schemes (the vast majority of public sector funds) will not be allowed to be transferred from April 2015.
3. A further explanation of the reforms:
a. You can now take your pension how you like.
From April 2015, no matter how much you decide to take out from your pension after retirement, withdrawals from your pension will be treated as income; the amount of tax you will pay on what you withdraw will depend on the amount of other income you have in that year. This is instead of being taxed 55% for full withdrawal, as it has been previously.
b. 25% of your pension pot will remain completely tax-free, as it was before. You’ll be able to access 25% of your pot in one go without paying any tax.
c. This applies just to people with ‘defined contribution’ pensions. This is a type of pension also known as a ‘money purchase’ scheme.
This is when the money you and your employer pay in is invested by a pension provider chosen by your employers. The amount you get when you retire usually depends on how much has been paid in and how well the investment has done.
d. People who have a ‘defined benefit’ scheme will benefit too.
A ‘defined benefit’ pension is typically a promise of a certain level of pension in retirement which is linked to your salary. It has been announced that people in the private sector or in a funded public sector scheme will still be able to transfer from a defined benefit pension scheme to a defined contribution one if they want to, meaning they can benefit from the changes.
5. Everyone who will be able to take advantage of the new reforms will be able to access free and impartial guidance. This will help people make confident and informed choices on how they put their pension savings to best use.
This guidance will be available through a number of different channels - via an online tool, over the phone, or face to face. Individuals will be able to choose the channel, or mix of channels, that they find most convenient.
It will be entirely impartial, so won’t be given by anyone who could be trying to sell you a product.
6. Your pension provider or scheme will be required to tell you about the guidance and how to access it. Accessing the guidance will be arranged by your pension provider, who will be required to tell you about it.
7. The changes will come into effect from April 2015
If you are over the age of 55, or will be from April 2015, you will be able to take advantage of the new system from then. If you’re younger than 55 then you will be able to take advantage of the new system when you do reach 55.
8. The Government continues to believe that transfers from unfunded public service defined benefit schemes should be banned, in order to protect the Exchequer and taxpayers. Transfers from funded public service defined benefit to defined contribution schemes will be permitted, and safeguards similar to those in the private sector will be introduced where appropriate.
9. Detailed Summary on Proposed Changes can be found at:
https://www.gov.uk/government/upload...work_print.pdf
Summary
The government intention has been well received in providing further flexibility in accessing your Pension funds; however, those with Unfunded Public Defined Benefit Schemes will not be able to transfer from April 2015. Therefore, those wishing to do so have a limited period of time in which to commence their transfers to either another UK fund or to move it outside the UK.
Should you need further assistance in either understanding the new rules
and / or facilitating a UK Pension Transfer to an Offshore Pensions Scheme such as an Australian Super Fund then please do not hesitate to contact us on 08 93758503 or via email [email protected]
Aug 17th 2014, 1:02 pm
#4
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Re: UK Pensions Proposed Changes for April 2015
I just don't understand all this!
I already receive a UK state pension and a NHS pension and I will be returning to Oz before the year is out on a permanent basis. I am totally dismayed by all the new changes and I have no idea how it will affect me if at all. It is a constant worry that the UK state pension is not indexed up once I leave the UK as it is, without all this to consider too. I really don't know what to do!!
Do these new changes apply to people already in receipt of their pensions and if so should we be doing something about it before 2015
I already receive a UK state pension and a NHS pension and I will be returning to Oz before the year is out on a permanent basis. I am totally dismayed by all the new changes and I have no idea how it will affect me if at all. It is a constant worry that the UK state pension is not indexed up once I leave the UK as it is, without all this to consider too. I really don't know what to do!!
Do these new changes apply to people already in receipt of their pensions and if so should we be doing something about it before 2015
Last edited by ileay; Aug 17th 2014 at 1:15 pm.
Aug 18th 2014, 1:06 am
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Re: UK Pensions Proposed Changes for April 2015
If you are already receiving a pension from your provider the changes will not normally affect you. There are no proposed changes to you State pension. If you are drawing down your NHS pension already this will not affect you.
The changes relate to how you can access your funds from next year being an option to take it now as a 100% lump sum from age 55 and ceasing the transfer of unfunded public deified benefit schemes ie NHS Teachers etc - (not being paid as a pension presently) out of the UK.
I hope that helps. If still unsure just PM and I will discuss with you.
Cheers John
The changes relate to how you can access your funds from next year being an option to take it now as a 100% lump sum from age 55 and ceasing the transfer of unfunded public deified benefit schemes ie NHS Teachers etc - (not being paid as a pension presently) out of the UK.
I hope that helps. If still unsure just PM and I will discuss with you.
Cheers John
Aug 18th 2014, 9:21 am
#6
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Re: UK Pensions Proposed Changes for April 2015
Hello John,
Thank you so much for clearing that up.
I thought that may be the case but it's not actually said anywhere. I am relieved, at least I don't have to worry about that.
Thanks again for being so helpful.
Thank you so much for clearing that up.
I thought that may be the case but it's not actually said anywhere. I am relieved, at least I don't have to worry about that.
Thanks again for being so helpful.
Aug 18th 2014, 9:54 am
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Re: UK Pensions Proposed Changes for April 2015
No worries at all - happy to help out . Cheers John
Sep 25th 2014, 10:04 am
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UK Pensions Proposed Changes for April 2015 - Update 25 Sept 14
The proposed amendments are set to be introduced as a Finance Bill on the 3rd of December 2014.
It is unknown the full extent of the proposed changes as some changes may have been made since the draft proposals were released, however there is a possibility that under the exceptions rule that Transfers offshore will still be allowed. But no one knows until then and nothing is assured.
Currently the Proposals in short are:
1. Unfunded Public Defined Benefit Schemes such as NHS, Police and Teachers will not be allowed to be transferred to any other fund from April 2015.
2. Private Defined Benefits Schemes (employer schemes) can still be transferred but any value over 30 K GBP will require the services of a UK Financial Planner to do so. This will push the cost up to undertake a transfer.
3. You will be able to take your funds as a lump sum from aged 55 and there is no longer a requirement to take a annuity. However, it will be 25% tax free and the remainder taxed!
4. A realigning of the taxes paid on death of a pension down the current inheritance rate of 40%.
With transfers especially the Public ones now taking up to 6 months to affect there is not much time to ensure your funds are transferred especially with the uncertainty and the high demand on the funds currently.
Happy to help with any transfers!
Cheers
It is unknown the full extent of the proposed changes as some changes may have been made since the draft proposals were released, however there is a possibility that under the exceptions rule that Transfers offshore will still be allowed. But no one knows until then and nothing is assured.
Currently the Proposals in short are:
1. Unfunded Public Defined Benefit Schemes such as NHS, Police and Teachers will not be allowed to be transferred to any other fund from April 2015.
2. Private Defined Benefits Schemes (employer schemes) can still be transferred but any value over 30 K GBP will require the services of a UK Financial Planner to do so. This will push the cost up to undertake a transfer.
3. You will be able to take your funds as a lump sum from aged 55 and there is no longer a requirement to take a annuity. However, it will be 25% tax free and the remainder taxed!
4. A realigning of the taxes paid on death of a pension down the current inheritance rate of 40%.
With transfers especially the Public ones now taking up to 6 months to affect there is not much time to ensure your funds are transferred especially with the uncertainty and the high demand on the funds currently.
Happy to help with any transfers!
Cheers
Last edited by john in oz; Sep 26th 2014 at 12:25 am.
Nov 28th 2014, 7:15 pm
#9
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Re: UK Pensions Proposed Changes for April 2015
I have a SIPP in the UK, I am permement resident in New Zealand, do not pay UK tax and in 4 year transitional period in New Zealand, can it be possible therefore to take ALL of SIPP funds out and pay no tax in the UK, or are there going to be special rules for ex-pats? Until these changes were made, we understood our only route was to go to a QROPS?
Nov 29th 2014, 1:24 am
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Re: UK Pensions Proposed Changes for April 2015
Thanks Wendy - the current rules are either wait until you can access your funds normally in the Uk or transfer to another offshore scheme QROPS which you have indicated being the case above.
The proposed changes go through parliament next week I believe and will give clarity on final outcomes and any minor changes to the proposed rules.
Currently proposed that from April 2015 you can access your pension funds from age 55 (if your fund allows it to) as a 100% lump sum without the requirement to convert it to an annuity pension (ongoing pension). However any funds taken 25 % will be untaxed and the remaining 75% is taxed at your marginal rates.
So Depending on final legislation etc you may be able to access your funds in the UK but a proportion will be subject to tax.
The proposed changes go through parliament next week I believe and will give clarity on final outcomes and any minor changes to the proposed rules.
Currently proposed that from April 2015 you can access your pension funds from age 55 (if your fund allows it to) as a 100% lump sum without the requirement to convert it to an annuity pension (ongoing pension). However any funds taken 25 % will be untaxed and the remaining 75% is taxed at your marginal rates.
So Depending on final legislation etc you may be able to access your funds in the UK but a proportion will be subject to tax.
Nov 29th 2014, 3:02 am
#11
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Re: UK Pensions Proposed Changes for April 2015
Thanks Wendy - the current rules are either wait until you can access your funds normally in the Uk or transfer to another offshore scheme QROPS which you have indicated being the case above.
The proposed changes go through parliament next week I believe and will give clarity on final outcomes and any minor changes to the proposed.
So Depending on final legislation etc you may be able to access your funds in the UK but a proportion will be subject to tax.
The proposed changes go through parliament next week I believe and will give clarity on final outcomes and any minor changes to the proposed.
So Depending on final legislation etc you may be able to access your funds in the UK but a proportion will be subject to tax.
Nov 29th 2014, 3:08 am
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Re: UK Pensions Proposed Changes for April 2015
Yes an update as soon as known.
If you are drawing down a pension in the UK you get a tax free threshold on this currently.
If you are drawing down a pension in the UK you get a tax free threshold on this currently.
Dec 4th 2014, 10:05 pm
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Re: UK Pensions Proposed Changes for April 2015
Hi John, thanks for your updates on the subject of QROPS so far and how the new reforms in the UK affect them.
If I understand you correctly, this will mean that both my husband who is a serving prison officer of 21 years and myself, a serving police officer of 18 years, have no hope of transferring our pension schemes to Canada? We're both Canadian citizens and were planning on returning home summer 2015.
Is there really no way around these new reforms for us? If not, I'm just gutted....
I'd appreciate any advice or guidance on the subject you can share.
If I understand you correctly, this will mean that both my husband who is a serving prison officer of 21 years and myself, a serving police officer of 18 years, have no hope of transferring our pension schemes to Canada? We're both Canadian citizens and were planning on returning home summer 2015.
Is there really no way around these new reforms for us? If not, I'm just gutted....
I'd appreciate any advice or guidance on the subject you can share.
Dec 4th 2014, 11:59 pm
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Re: UK Pensions Proposed Changes for April 2015
Most current update.. The Autumn Budget announced on 03 Dec 2014 provides very little clarity on the finer details and any loop holes in allowing transfers offshore and if they were to include such within say an 'exceptional cases' clause then we would not know this for some time as it takes them time to sort all this out.
At this point of time any unfunded public defined benefit scheme (final salary scheme) will not be allowed to be transferred to any other fund including offshore.
Members of Unfunded Public Defined Benefit Schemes who wish to transfer offshore in the future really only have two options:
1. Transfer your funds to another UK fund that will allow future transfers offshore such as a contribution scheme or
2. Transfer it offshore to another QROPS offshore fund which allows further transfers to another country.
The above really requires Professional advice and in most cases now given the proposed laws other UK funds in the majority of circumstances are not accepting transfers from any defined benefit scheme unless formal advice has been provided by a UK adviser.
Important - If you want to transfer then you need to commence the above with no delays as a normal transfers takes 3 months and time is running out now to get this started.
If you wish to consider any of the above options and speak with a UK Adviser who specialises in this area and works with us to facilitate transfers to other Countries then simply PM/Email me or contact me via my contact my contact details below.
At this point of time any unfunded public defined benefit scheme (final salary scheme) will not be allowed to be transferred to any other fund including offshore.
Members of Unfunded Public Defined Benefit Schemes who wish to transfer offshore in the future really only have two options:
1. Transfer your funds to another UK fund that will allow future transfers offshore such as a contribution scheme or
2. Transfer it offshore to another QROPS offshore fund which allows further transfers to another country.
The above really requires Professional advice and in most cases now given the proposed laws other UK funds in the majority of circumstances are not accepting transfers from any defined benefit scheme unless formal advice has been provided by a UK adviser.
Important - If you want to transfer then you need to commence the above with no delays as a normal transfers takes 3 months and time is running out now to get this started.
If you wish to consider any of the above options and speak with a UK Adviser who specialises in this area and works with us to facilitate transfers to other Countries then simply PM/Email me or contact me via my contact my contact details below.
Apr 5th 2015, 7:33 pm
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Re: UK Pensions Proposed Changes for April 2015
Hi John,
I want to know how they will calculate the marginal rate of tax for the rest of stake holder pension after taking the 25% tax free.
The reason for my question is that I live and work in Canada and I don't pay any taxes in UK and want to take out whole of my stake holder pension pot when I turn 55 in June.
Also I do not hold a UK bank account but should able to open a Sterling account with a Canadian Bank; will there be any issue with that?
I want to know how they will calculate the marginal rate of tax for the rest of stake holder pension after taking the 25% tax free.
The reason for my question is that I live and work in Canada and I don't pay any taxes in UK and want to take out whole of my stake holder pension pot when I turn 55 in June.
Also I do not hold a UK bank account but should able to open a Sterling account with a Canadian Bank; will there be any issue with that?