Posted June 1st, 2011
Many doctors, dentists and high earning public sector employees are seriously considering their options with regard to their pensions and some may even be considering leaving pensionable service or even transferring out!
Tax increases, the introduction of the annual allowance and lifetime allowance, the potential increases to contribution rates are all factors which are focusing minds. At the same time the Hutton review is calling for increases to retirement ages and the introduction of career average schemes.
But this may be hasty and it is important to consider all your options at or close to retirement.
If you are caught by these issues and would welcome a discussion on your retirement planning why not call me on 01204 663904 or email phil@white-well.co.uk
Tags: annual allowance, Dentists, Doctors, Hutton review, Options, Pensions, Public Sector, Retirement, Transfer Out | Posted in Annual Allowance Guidance |
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Posted November 29th, 2010
This is an NHS case I have worked on recently. The client approached me concerned that given he was over 10 years from retirement he would be suffering an annual allowance charge on a regular basis
Background
Pensionable Pay – £127,407
Pensionable Service – 23 years
Current entitlement (Opening value) – accrued values to date (assume early retirement without reduction or enhancement)
• 23 / 80 x £127,407 = £36,629 per annum
• Current lump sum = £109,887
• Pension Input Opening Amount – £36,629 x 16 = £586,064
• Add lump sum = £586,064 + £109,887 = £695,951
• Increase by CPI = £695,951 x 1.03% = £716,829
Next year (assume no pay rise)
• 24 / 80 x £127,407 = £38,221 per annum
• Current lump sum = £114,663
• Pension Input Closing Amount – £38,211 x 16 = £611,376
• Add lump sum = £611,376 + £114,663 = £726,039
Result
• Increase in benefits = £726,039 – £716,829 = £9,210
Therefore, there was no immediate chance of an Annual Allowance charge.
If you would like to discuss your pensions and how you might be affected by the annual allowance, please contact me on 01204 663904 or email phil@white-well.co.uk
Tags: annual allowance, Annual Allowance Charge, Client Example, Current Entitlement, Current lump sum, Early Retirement, Lump Sum, NHS, Opening Value, Pension Input Closing Amount, Pension Input Opening Amount, Pensionable Pay, Pensionable Service, Retirement | Posted in Annual Allowance update |
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Posted November 26th, 2010
The annual allowance will continue to not apply on death. Although death is a benefit crystallisation event for the purposes of the lifetime allowance. See my other site LifetimeAllowance.co.uk for further details.
If you would like to discuss your pensions and how you might be affected by the annual allowance, please contact me on 01204 663904 or email phil@white-well.co.uk
Tags: annual allowance, Benefit Crystallisation Event, Death, Death Exemption | Posted in Annual Allowance update |
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Posted November 22nd, 2010
Currently, in the final year of retirement (i.e. when all benefits are crystallised) it is possible to pay in contributions without being subject to the current annual allowance of £255,000.
This exemption is to be removed in the new regime.
If you would like to discuss your pensions and how you might be affected by the annual allowance, please contact me on 01204 663904 or email phil@white-well.co.uk
Tags: annual allowance, Benefits, Contributions, Crystallised, Current Annual Allowance, Final Year Exemption, New Regime, Retirement | Posted in Annual Allowance update |
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Posted November 19th, 2010
The annual allowance will not apply on serious ill health or (potentially) “major” ill health but the government has not set out clear definitions yet.
Could a two tier system of ill health be upon us.
If you would like to discuss your pensions and how you might be affected by the annual allowance, please contact me on 01204 663904 or email phil@white-well.co.uk
Tags: annual allowance, Ill health, Ill health exemption, Major Ill health | Posted in Annual Allowance update |
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Posted November 15th, 2010
The new annual allowance rules have not amended the application of tax relief on pension contributions.
The new rules have not amended the application of tax relief on pension contributions for basic rate tax payers. However, it has for high earners and removed the anti-forestalling measures which meant high earners would have only received tax relief at their highest marginal rate up to £20k (or £30k for ad hoc contributions) unless protected. This simplification is to be welcomed.
If you would like to discuss your pensions and how you might be affected by the annual allowance, please contact me on 01204 663904 or email phil@white-well.co.uk
Tags: annual allowance, Annual Allowance Rules, Marginal rate, Pension Contribution, Pension Contribution Tax Relief, Personal Contributions, Tax Relief | Posted in Annual Allowance update |
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Posted November 10th, 2010
Current legislation permits individuals or trustees to specify contribution years that are not in line with the tax years. This can be attractive in terms of making larger contributions than would ordinarily be possible under the current annual allowance rules.
Under the new legislation these rules are to be kept, with transitional rules to cover anyone who has already started a PIP that covers the April 2011/12 tax year and its lower annual allowance.
If you would like to discuss your pensions and how you might be affected by the annual allowance, please contact me on 01204 663904 or email phil@white-well.co.uk
Tags: annual allowance, Annual Allowance Rules, April 2011/12, Contribution, Larger Contributions, Pension Input Period, PIP | Posted in Annual Allowance update |
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Posted October 24th, 2010
This week I was talking through the annual allowance changes with a Consultant client of mine and he confirmed he had received guidance from the British Medical Association (BMA).
To work out the annual allowance opening and closing values for pension inputs, my client confirmed, that the BMA use a factor of 19 times. This is a very helpful shortcut to the long winded calculation methodology set out in HMRC’s guidance (and on some of the examples on this site!)
It is also enables you to work out what the minimum increase in pension accrual each year in the NHS Pension Scheme can be without the Annual Allowance charge applying.
If the annual allowance stands at £50,000 then the maximum extra pension accrual in the NHS Scheme can be is £50,000 / 19 = £2,631 per annum (without an annual allowance charge applying).
This should be considered against current and future accrual in the NHS Scheme and any future salary rises.
If this issue affects you, please feel free to contact me to discuss matters further.
Tags: annual allowance, Annual Allowance Charge, BMA, British Medical Association, Closing Value, Consultant, Future Accrual, HMRC, Maximum Pension Accrual, NHS, NHS Pension, NHS Pension Scheme, NHS Pensions, NHS Scheme, Opening Value, Pension Accrual, Pension Inputs | Posted in Annual Allowance update |
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Posted October 21st, 2010
Her Majesty’s Revenue & Customs (HMRC) has published a very good guide on the annual allowance
and you can find it here – http://www.hmrc.gov.uk/pensionschemes/annual-allowance/guide.htm
But it does take some interpretation so if you would like a discussion with a highly qualified adviser,
please call us – 01204 663904.
Tags: Annual Allowance Guidance, free guide, HMRC | Posted in Annual Allowance Guidance |
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Posted October 19th, 2010
Important Annual Allowance update is coming soon.
Tags: annual allowance, changes, news, update | Posted in Annual Allowance update, Uncategorized |
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