It’s all change for pensions from 6 April 2006. There are currently eight different types of pension scheme, each with its own mystifying set of rules. The Government have been determined to simplify this system and, from 6 April 2006 (known as ‘A-Day’), there will be a single regime, which will make all pensions subject to the same tax treatment.

The changes will affect almost everyone. Some existing schemes will gain, some may lose out and others will remain unaffected. All schemes, whether occupational or personal, should be reviewed to assess the impact of ‘A-Day’.

The Government’s aim is also to encourage greater pension investment. Contribution limits are being raised, initially to £215,000 each year, and many assets that were previously forbidden will now be available as investments for pension funds. You will be able to use your pension fund to buy a much wider range of assets, which might include residential property, art, antiques, holiday homes, fine wines or classic cars. However, borrowing from banks to facilitate such purchases will not be as easy as it has been in the past.

There are also changes to the allowable size of a pension fund, retirement age and tax free cash. You are strongly advised to review your pension position by A-Day to ensure that you take any action which you need before the changes are introduced.

For further information please contact Mark Sheen

07/12/2005