In his budget, the Chancellor has:
- cut the lifetime allowance from £1.25m to £1m from
April 2016 but has decided not to change the annual allowance
citing that a change to the annual allowance would impact on
moderately paid public servants
- the reduction of the annual allowance will also affect some public sector and not-for-profit sector workers;
- announced that from 2018, the lifetime allowance will be index linked;
- announced plans to give some relief to the widows and widowers of intelligence services officers, fire-fighters and police officers who die whilst on duty;
- announced the much trailed policy to permit pensioners who
currently hold annuities to sell those annuities:
- there is currently no detail about how the secondary market will operate and HM Treasury have issued a "call for evidence" consultation on creating such a market;
- the Chancellor has committed to consultation to ensure that pensioners seeking to "cash in" their annuity will be given appropriate guidance and advice; and
- the abolition of the 55% tax charge from April 2016 on cashing in the annuities;
- the Government has announced the issuance of long-dated
Government stock and the redemption of the last of the undated
Government stocks:
- for defined benefit pension schemes, if the greater supply of long-dated gilts moves the price of those assets down, that may lead to an increase in yield which could result in lower defined benefit liabilities, although such a reduction in price would also have an impact on the assets of those schemes, some of which will be held in long-dated gilts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.