The Finance Act 2014 received Royal Assent earlier this month, formally putting in place the temporary flexibilities announced in the Budget, detailing the individual protection regime for lifetime allowance and introducing new powers for HMRC in its fight against pensions liberation.
Below is a briefing summary of the relevant provisions. Schemes wishing to offer members the new temporary benefit flexibilities (pending the April 2015 revolution) should first ensure that their rules allow them to do so.
|Relaxation of the drawdown rules, lowering the minimum income requirement to £12,000. Likely to become obsolete in April 2015.
|Relaxation of trivial commutation and small pot rules to allow trivial commutation of up to £30,000 and small pots of up to £10,000. Likely to become obsolete in April 2015.
|Section 43 and Schedule 5
|Additional flexibility pre-April 2015, including extending the period in which pensions must commence following payment of a lump sum.
|Section 44 and Schedule 6
|Details of the individual protection regime for those who had accrued pension rights valued at between £1.25m and £1.5m on 5 April 2014 and so are affected by the reduction in lifetime allowance on 6 April 2014. Those affected have until 5 April 2017 to apply to HMRC for protection.
|Technical changes to tax on some inputs to non-UK pension schemes
|Section 46 and Schedule 7
|New HMRC anti-liberation powers. These include new registration procedures and information gathering powers as well as a requirement that the scheme administrator must be "fit and proper". The new provisions apply to all applications for registration since 20 March 2014.
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.