PENSIONS – PENSION REFORM 2014/15
Synopsis: The government have published their response to the Freedom & Choice in Pensions consultation.
Date posted: Tuesday, July 22, 2014
Further to our bulletin detailing the Ministerial statement as a forerunner to the full response, the full government response to the Freedom & Choice in Pensions consultation has now been published. You can access the consultation response here.
The headlines are:
• A statutory override will be introduced so that all DC schemes can offer the flexibility proposals.
• Increased transfer flexibility for DC members to transfer up to the date of retirement
• Annuity rules to be relaxed to permit lump sum withdrawals and decreasing annuities Minimum pensions’ age to increase from 55 to 57 in 2028
• 55% drawdown lump sum death benefit tax charge likely to be reduced and will be announced in the Autumn Statement
• DB to DC transfers are to be permitted but with a new statutory requirement for professional independent transfer advice
• Funded DB public service schemes will permit transfers to DC: unfunded public sector schemes will not permit transfers to DC
• The government will consult on extending the flexibility provisions to DB schemes
• Guidance guarantee to be provided by TPAS and MAS and others
• Once ‘flexible’ drawdown is triggered from April 2015, tax relievable contributions will be permitted up to £10,000pa cap. New cap will not apply to existing capped drawdown clients who will remain subject to the current Annual Allowance (£40,000) until such times as the capped drawdown limit is exceeded.
• QROPS to be considered in light of new flexibility provisions to ensure appropriateness of rules
Next Steps
- Pensions Tax Bill will introduce the flexibility provisions
- Consultation on draft legislation to be published in August 2014
- Draft legislation to be introduced to Parliament autumn 2014
- Pension Schemes Bill was introduced on 26th June 2014 detailing defined ambition pensions
- The Pension Schemes Bill contains provisions to remove the option to transfer from a public service scheme to a DC scheme
- The Pensions Schemes Bill will be amended to introduce the guidance guarantee provisions.
We will post a detailed summary of the government’s response to the consultation in due course.
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