‘A’ Day (the Appointed day) arrived on 6th April 2006 and brought with it sweeping and radical changes in relation to pension legislation.
This has created a single universal regime that replaced the previous eight tax regimes and the changes affect all savers in occupational and personal pension schemes, employers and financial advisers.
Pension simplification introduced two new controls, the pension Lifetime Allowance (LTA) and pension Annual Allowance (AA).
From April 2006, there is now just one set of tax rules for all types of pension, with an individual LTA of £1,055.000 (2019/2020) and an individual AA of £40,000 (2019/2020). Most individuals can fund up to these limits with the possibility to also carrying forward unused AA from the previous 3 years.
High earners with income in excess of £110,000 p.a. may have a reduced annual allowance of £10,000 under the tapered annual allowance rules. Individuals who have already flexibly accessed income from a pension scheme will only have an AA of £4,000.
Exceeding either the LA or the AA will simply trigger a tax charge.
Other changes included:
In addition, another raft of changes introduced in April 2016 also gives individuals further and greater flexibility to access their pension savings.
The changes also include:
Pensions are a long-term investment. You may get back less than you put in. Pensions can be and are subject to tax and regulatory change therefore the tax treatment of pension benefits can and may change in the future.
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