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Budget 2014

The recent Budget introduced major changes particularly to the pensions industry. Crucially financial advice and flexibility is now more important than ever! As such choosing a pension provider that provides this flexibility takes on even greater importance.


From April 2015 the Government is removing restrictions on people’s ability to drawdown from their individual pension pots after age 55. This means:

1. No restrictions on the amount of income that can be drawn from the accumulated fund.

2. No requirement to purchase an annuity.

3. Tax free cash up to 25% of the fund remains.

4. All other benefits will be subject to the individual’s marginal rate of income tax.

The Treasury has also commented on the fact they feel that the current 55% tax charge generally levied on second death is high and has agreed to review this.  The outcome to this review will be critical in the decision of where to leave your pension wealth.

From 27 March 2014

The following changes are effective:-

  • Trivial commutation limit increased from £18,000 to £30,000.
  • Anyone currently receiving a capped drawdown pension will be able to increase their income to 150% from 120% of an equivalent annuity from their next formal pension review date.
  • In order to receive flexible drawdown, it was previously necessary to have £20,000 of guaranteed pension income which will reduce to £12,000. A figure more achievable for anyone receiving state pension.
  • “Small pot” lump sum limit increased from £2000 to £10,000 (up to three lump sums).

The Government has announced increased HMRC powers in relation to scheme administrators and scheme registration in order to combat pensions liberation.

The changes could potentially reshape the whole pensions market. The increased flexibility at retirement removes one of the perceived disadvantages of pensions and could encourage greater savings. It will also complicate the ‘at retirement’ market with many individuals reluctant to ‘lock’ into an annuity in anticipation of increased choice in 2015.

For further information on how the Budget 2014 may affect you, contact Kerry Houghton on 01772 550614 or email

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