The changing retirement landscape

The changing retirement landscape

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The 2014 Budget proposals have been described by some retirement planning experts as a pensions revolution. The radical proposals came amid a changing retirement landscape, which Acumen explores further in this blog.

While the broad brushstrokes of the Government’s pension reforms are now clear, not everything is settled. The general election takes place on 7 May 2015, which means some of the proposals might fall by the wayside, while others could be altered at short notice. This uncertainty means that, as far as possible, you should build flexibility into any plans you make.

The pensions world is changing

These new reforms come at a time when the world of pensions is already undergoing a variety of significant changes. For instance, the annual allowance was reduced again for the current tax year. This time to just £40,000, compared with the £255,000 allowance in 2010/11. The annual allowance basically sets the maximum tax-efficient limit for contributions to all your pension arrangements during a tax year.

There was also another cut in the lifetime allowance too. This effectively sets the maximum tax-efficient limit for the overall value of your pension benefits. The lifetime allowance is now £1.25m against a peak of £1.8m in 2011/12.

Meanwhile, automatic enrolment of employees and other workers into pension schemes is gradually progressing through the labour force, having started in October 2012 for the largest employers. This will not come fully into operation until October 2018.

The current structure of the state pension – basic state pension plus, for employees, the State Second Pension (S2P) – will be replaced by a new single-tier state pension from April 2016. This will cover both the employed and the self- employed, and it will be worth a maximum of about £151.25 a week in 2015/16 terms, before any transitional increments apply.

In the background, the earliest age at which people will be allowed to start drawing their state pension is set to rise. It will be 66 for both men and women by October 2020, with another year added between April 2026 and April 2028.

Acumen’s account on matters

Acumen Managing Director and pensions specialist, Angela Maher, said: “Now may be the right time to play catch up if you have neglected your pension savings in recent years or have relied solely on your employers scheme to provide for your retirement.

“The new pension freedoms have provided a fresh incentive to save – with help from the taxman. Your £80 a month investment becomes £100 in a pension, if you are a basic or nil rate tax payer, and if you pay higher or additional rate the results are even better.

“Unlimited access without the need to buy an annuity, and the ability to pass on pension wealth to your loved ones if you don’t spend it all in your lifetime, are just some of the reasons why the interest in pensions has been rekindled.

“We are already helping new and existing clients get the best pension returns – can we help you with yours?”

To discuss your pension plans with one of our dedicated team please contact us today on 0151 520 4353 or email

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