Sweeping pension changes dominated the headlines following the government’s Spring Budget earlier this month. But while those changes should be positive, it may be worth waiting until they become law before making any changes to your retirement plan.

As we reported at the time, the Budget proposed scrapping the lifetime allowance and raising the annual allowance – the amount you may be able to put into your pension each year without paying a tax charge (more details below).

The changes will now need to pass into law and, like any legislation, go through the parliamentary process.

The government has published its Spring Finance Bill 2023 outlining the detail, and said its pension changes will come into effect from 6 April.

Tina Turner, one of our chartered financial planners, welcomed the changes but advised caution.

“We’re recommending avoiding any knee-jerk reactions and taking advice from a qualified, authorised pension adviser before making any changes based on what came out of the Budget,” she said.  “The proposals could indeed be very positive for some, but there are still areas where we need more finite detail, so we can support our customers in what can be a complex area.

She added, “At this point in time, people should only rely on the pension rules and laws as they currently stand, not on what’s expected in the future, until the details are confirmed.”

Here’s a quick run-down of the main, pension-related changes announced by Chancellor Jeremy Hunt as part of last week’s Spring Budget:

• Lifetime pension allowance scrapped – the limit on how much someone can generally put aside in pension savings before they have to pay a lifetime allowance charge is being removed. The current limit, £1,073,100, was set to be in place until 2026, but the allowance will be fully abolished from April 2024. The maximum, non-protected amount you can take out of your pension tax free when you reach minimum pension age as a lump sum remains 25%, but it will now be capped at £268,275.
• Annual pension allowance extended – the most someone may be able to pay into a pension in any given tax year without a tax charge (there are strict rules so advice is recommended). It’s set to go up by 50%, to £60,000 from £40,000. However, high earners will have their allowance tapered down, depending on how much they earn, to a minimum of £10,000.

IF YOU WOULD LIKE TO SPEAK TO ONE OF OUR SPECIALIST WEALTH MANAGERS TO DISCUSS YOUR FINANCIAL NEEDS, INCLUDING PENSIONS, PLEASE CONTACT YOUR PREMIER MANAGER.

We're here to help, but please be aware that we cannot offer any tax advice. We recommend you contact an independent tax advisor to discuss your personal tax situation.

Tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances.

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