TPAS Newsletter - March 2012
It was Budget Day last week (Wednesday 21 March 2012), with Chancellor George Osborne making the following announcements.
State Pension Age (SPA)
The Government has made a number of changes to SPAs over the past few years, primarily because of increased longevity of the population. The Government now plans to put in place a formal mechanism that will change SPAs automatically in-line with changes in longevity.
Single-tier State Pension
There have been moves towards a single-tier State Pension for a while. But the Government has announced that it will become a reality "early in the next Parliament". And as expected, it is likely to be in the region of £140 per week.
Personal Tax Allowances
Those over 65 and 75 have increased personal tax allowances. From April 2013, the age-related element will be removed and existing age-related allowances will be frozen at the 2012/13 levels until they align with the personal allowance.
As previously announced, the Lifetime Allowance will reduce from £1.8m to £1.5m from April 2012.
From 6 April 2012, it will be possible for those aged 60 or over to commute (i.e. cash-in) personal pension plans and stakeholder pension schemes that are valued at under £2,000 (subject to a maximum of two such commutations in a lifetime). It is already possible to commute occupational pension schemes (subject to strict conditions).
No changes to the current tax relief system were announced.
April 2012 Rates & Allowances
- Full Basic State Pension (BSP) - £107.45 per week
- Category B State Pension - £64.40 per week
- Age-80 Addition - £0.25 per week
- Graduated Pension - 12.51p per unit
- Pension Credit threshold (single) - £142.70 per week
- Pension Credit threshold (couple) - £217.90 per week
Union Fails in Latest CPI Bid
Unions have lost their latest battle against the Government and their change to pension increases from the Retail Price Index (RPI) to the Consumer Price Index (CPI).
The High Court ruled the change was not unlawful in December 2011. And this month the Court of Appeal upheld that ruling.
The unions involved are considering their options.
Royal Mail Deal Announced
The Government has announced a deal that will see it take on the Royal Mail pension fund in the next few weeks. It will take both the fund's £28bn assets and its £37.5bn liabilities, in a move that is expected to secure the pension benefits of the scheme's members, and facilitate private sector investment into the Royal Mail.
Updated! Spotlight On...
You find all of these factsheets on our website.
- The new drawdown rules (SPOT001)
- The new flexible drawdown rules (SPOT002)
- The new drawdown rules for people already using drawdown (SPOT003)
- Changes to the annual allowance (SPOT004)
- Income drawdown v annuity purchase (SPOT005)
- Annual Allowance transitional rules (SPOT006)
- How to test pension savings against the annual allowance (SPOT007)
- Trivial commutation - detailed (SPOT008)
- Getting financial advice (SPOT009)
- Using a redundancy payment to pay into a pension scheme (SPOT010)
- The change from RPI to CPI (SPOT011)
- Trivial commutation - quick (SPOT012)
- Transfers with immediate vesting vs OMO (SPOT013)
- Death benefits - taking small pots as a lump sum (SPOT014)
- Paying voluntary NI contributions - the extended rules (SPOT015)
- Tax and lump sums paid on death - defined benefit schemes (SPOT016)
- Tax and lump sums paid on death - defined contribution schemes (SPOT017)
- Tax and lump sums paid on death - income drawdown plans (SPOT018)
- Fixed protection (SPOT019)
We hold a live online Q&A session on the second Wednesday of every month. During the session, our experts will answer any pension related questions you may have.
The next live online question & answer session is on Wednesday 11 April 2012 between 2pm and 3pm.
If you have any pension questions, please feel free to contact us by calling our helpline on 0845 601 2923, emailing email@example.com or writing to us at 11 Belgrave Road, London, SW1V 1RB.