In recent years Autumn Statements and Budgets have meant big changes to pensions. This year's Autumn Statement was quieter, but some changes were announced.
Automatic enrolment minimum contribution rates
The government will delay the next two scheduled increases in automatic enrolment minimum contribution rates by six months each, to align these changes with the start of the tax year. This means that the total contribution rate will increase from 2% to 5% in April 2018, rather than October 2017. The full 8% contribution will now come into effect in April 2019. Further details about automatic enrolment are available here and here.
Secondary market for annuities
The government is continuing with its proposal to create a secondary market for annuities, allowing individuals to sell their annuity income stream. The government will set out further details on this measure, including the framework for the consumer protection package, in its consultation response this December. This legislation will be introduced in the Finance Bill 2017.
Local Government Pension Scheme
There are currently 89 separate funds in the LGPS, and the government wishes to pool these into 6 'British Wealth Funds', each containing at least £25 billion of Scheme assets. The government is now inviting administering authorities to come forward with their initial proposals for pooling by 19 February 2016, with final proposals by 15 July 2016.
Inheritance Tax
The government will legislate to ensure a charge to inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This will be backdated to apply to deaths on or after 6 April 2011 and closes a loophole in the legislation.
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.