Severn Trent Pension Scheme - PRAG

Pensions news
Changes to pensions tax relief
If you earn £150,000 or more a year (from all sources, including
total earnings, pension, investment and rental income), you may
be affected by the Chancellor’s announcement that he intends to
restrict tax relief on pension contributions.
Tax relief will taper to 20% for incomes between £150,000
and £180,000. Details of these measures are subject to
consultation, although the intention is they will come into
force in April 2011.
To prevent those likely to be affected by the change from
increasing their contributions or benefits before the finalised
restrictions take effect in April 2011, new anti-avoidance
legislation applied with immediate effect from 22 April 2009.
This applies to those individuals who:
• Have an income of £150,000 or more, and
• Change the pattern of their usual pension saving, and
• Whose overall annual pension saving is more than
£20,000 (the special annual allowance).
High earners who do not vary their pension arrangements
before 5 April 2011 should, therefore, not be affected
by the new charge in 2009/10 and 2010/11. However,
any increases in pension provision, say, through a one-off
contribution or an increase to existing contributions may be
subject to a new charge in 2009/10 and 2010/11.
If you think you might be affected by this change, we
recommend you speak to an independent financial adviser
– especially if you are planning to pay a one-off contribution
into the Scheme, or vary your Additional Voluntary
Contributions (AVCs).
Further information is available on the HM Revenue
& Customs website: http://www.hmrc.gov.uk/budget2009/
pensions-individuals-1550.htm
Are you planning to retire early?
If so, remember that the Government has increased the
minimum retirement age from 50 to 55, with effect from
6 April 2010. This means that, aside from retiring early due
to ill-health, you may not access your retirement savings
before age 55 if you retire after 6 April next year.
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