16 March 2023
We were delighted to hear that in the budget announcement this week pensions are being made a priority for change, detailing significant changes to pension tax allowances coming into effect on 6 April 2023.
What are these changes?
Chancellor Jeremy Hunt made significant changes in his Spring Budget by increasing the limit to what you can accrue in your pension each year by 50%. This was driven by NHS doctors who are in a defined benefit scheme similar to the Local Government Pension Scheme and should reduce or eliminate tax charges that high earners may face in a high accrual scheme.
Jeremy Hunt also announced the abolishment of the Lifetime Allowance removing the limit to how much you can save in your pension over your lifetime.
- The Lifetime Allowance (LTA) will be abolished.
- The standard Annual Allowance (AA) tax- free pension savings will increase from £40,000 to £60,000.
- The tapered Annual Allowance will now commence for individuals with adjusted income in excess of £260,000 (previously it was from £240,000).
- The minimum tapered Annual Allowance will increase from £4,000 to £10,000. i.e. based on the current working of the taper, it will taper down from £60,000 to £10,000 for adjusted income between £260,000 and £360,000.
- The Money Purchase Annual Allowance will increase to £4,000 to £10,000.
Where can I find out more?
The Government will introduce legislation in the Spring finance Bill 2023 to accommodate the changes. Following this and as soon as we receive guidance, communications will follow to our members.
In the meantime you can log into your My Wiltshire Pension account to find out more about your retirement projection.