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Pension Services

Pension Services. Pension Tax Relief Limits Update November 2011. Pension Services. Contents Summary of changes Who is affected Payment of charges Actions to take. Pension Services. Annual Allowance

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Pension Services

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  1. Pension Services Pension Tax Relief Limits Update November 2011

  2. Pension Services Contents • Summary of changes • Who is affected • Payment of charges • Actions to take

  3. Pension Services Annual Allowance • The amount your pension savings can increase in a year without becoming liable for a tax charge • Reduced to £50k from 6th April 2011 (was £255k) • Multiplier factor = x16 (was 10) pension + cash sum • Growth excess subject to tax at marginal income tax year • Carry Forward mechanisms for previous 3 years unused allowances • Money Purchase AVCs = total of the actual contributions paid, not the investment performance or AVC fund value

  4. Pension Services Who could be affected? • Combination of high salary and long service • Large pay rise, receive allowance, award • Promotion to a higher paid role • Limited scope to use previous unused allowances • Accruing pension at a higher rate than scheme accrual, paying Added Years AVC • Currently paying Money Purchase AVCs • Augmentation of retirement benefits • Deferred benefits NOT included in AA calculations

  5. Pension Services How are charges paid? • Personal taxation matter and member’s responsibility • Annual self-assessment tax return • “Pension Saving Statement” – from the pension scheme • Required by law – issue by Oct 2013 • Excess over £50k charged at highest marginal rate • “Scheme Pays” – charges in excess of £2K deducted from benefits to cover the payment.

  6. Pension Services Lifetime Allowance (1) • Overall maximum amount of your pension savings you can have without incurring a tax charge • Reduced to £1.5m from 6th April 2012 (was £1.8m) • Level fixed until tax year 2015/2016 and not expected to increase with inflation • Multiplier factor = x20 (unchanged) pension + cash sum

  7. Pension Services Lifetime Allowance (2) • Excess charge paid at Retirement • Charged at 55% if applied to Lump sum • Charged at 25% on pension income (+ income tax on pension income)

  8. Pension Services Fixed Protection • Retain higher LTA of up to £1.8m • Members who had based their retirement projections on previous limit of £1.8m • Applications to HMRC by 5th April 2012 – Form APSS227 • No future accrual in any pension arrangement • Scheme options if electing Fixed Protection

  9. Pension Services Actions to take • Review of personal circumstances- All pension arrangements + AVCs- Look ahead to April 2012 • Read scheme documents, information sources- Familiarise with scheme options, go to their websites • Independent Financial Advice- UCL can provide information but not offer financial advice • Further news / updates - We will update you as it becomes available

  10. Pension Services Where to find more information • Websites • USS: www.uss.co.uk • NHS: www.nhsbsa.nhs.uk/pensions • UCL Pension Services: www.ucl.ac.uk/hr/pensions Tax Relief Limits page + slides from presentations

  11. Pension Services Further presentations 2012 8th February @ 12.30pm 15th February @ 4.00pm

  12. Pension Services Questions? • From the floor • Talk to us after the presentation • Submit email to: pensions@ucl.ac.ukOr telephone: 0207 679 1999 (x41999)

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