Autumn Report 2013 - Pensions
Date:
13 December 2013
The Chancellor has confirmed that the state pension age will have increased to 67 for both men and women by 2028. It is also important to note that for females, the pension age will increase to 65 by 2018 and then to 66 (the same as men) by 2020.
A rise to age 68 is also now scheduled for the mid-2030s and now that the pension age is being directly linked to life expectancy, we are likely to see the state pension age rise to 70 and beyond by the 2060s. This could also be brought forward at a future date if life expectancy continues to rise at current rates.
So what does this mean for our clients?
As people will now have to wait longer to receive their state pension, anyone wishing to retire before age 67 or 68 will have to ensure they have sufficient pension provision to fund their retirement. The news of the increase in state pension age should prompt clients to review their current arrangements with a view to making additional contributions as necessary. Our Wealth Management team are on hand to assist clients with reviewing their existing pension plans or to advise on setting up a plan for the first time.
Personal pensions themselves were left rather unscathed by the Autumn Statement with the only real reference being confirmation of the already announced complicated change to pension tax relief which affects higher earners with workplace and private pensions and which takes effect from April 2014.
The lifetime allowance restricts the tax-advantaged pension savings that an individual can accumulate over their career and the limit is being cut from £1.5m to £1.25m.
Meanwhile, there is also a cut from £50,000 to £40,000 in the annual allowance, which limits the amount of tax-advantaged pension saving an individual can accumulate in one year.