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Know Your Pension Options

Our recent article “A budget for work, pensions, and childcare” took a quick look at some of the highlights from the 2023 Spring Budget. Now that the dust has settled it is worth highlighting a few of the pension changes which represent one of the most significant pension regulation shake-ups for a while.

For a start, the abolition of the pension lifetime allowance will enable individuals to carry on saving into their pension plans without attracting the high rates of tax which previously applied if they went over the set limit. However, it is worth noting that the tax-free amount which individuals can take out of their pensions has been capped at £268,275 (25% of the current lifetime allowance). For those individuals who previously had an agreed lifetime allowance excess the cap is set at 25% of that agreed level.

The increase in the pensions tax free annual allowance from £40,000 to £60,000 may not have initially seemed that beneficial for higher earners who were caught by annual allowance restrictions. However, a rise in the threshold from £240,000 to £260,000 allied to a rise in the money purchase allowance from £4,000 to £10,000 potentially opens up the way for increased pension savings for those individuals.

The effect of the budget pension changes means that when planning pension contributions for the tax year 2023/24 individuals should take a fresh look at their options. If you are looking for advice on pensions, or if your situation has changed and you may therefore need to review your existing pensions or investments, contact Beckworth by using one of the links on our website.