Budget 2014 Important Changes to Pensions

The Chancellor announced a number of important changes in this year’s Budget:

  • increasing the maximum income from 120% of the Government Actuary Department’s (GAD) table to 150%;
  • the minimum income requirement for flexible drawdown is now £12,000;
  • a maximum of 3 (previously 2) small pension pots up to £10,000 (previously £2,000) can be taken as a lump sum; and,
  • the amount you can fully commute (exchange for a lump sum) a pension on the grounds of triviality has increased from £18,000 to £30,000.

These changes come in to effect from 27 March, 2014.

The Chancellor also announced that the government will be consulting about several important changes that may be made from April, 2015:

  • the new limit of 150% of GAD will be removed, effectively meaning that someone could draw all of their pension pot as a lump sum. The amount would be taxable at the individual’s highest marginal rate, however;
  • individuals will be offered free and impartial guidance at the point of retirement; and,
  • the earliest age at which you can access your pension savings will increase from age 55 to 57 by the year 2028.

You can access the consultation here. The period expires on 11 June, 2014.

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