News

Get ready for A-Day – 20 February 2005, The Sunday Times by David Budworth

A-Day summary

Tax-free pension pot: There will be a tax free limit of £1.5 million, rising with inflation. Anything above that will be taxed at 55%. Existing benefits can be protected. Those in final-salary plans will be deemed to have a pot worth 20 times their annual pension – up to £75,000.

Contributions: The ceiling of how much of your annual salary you can put into your pension will equal total annual income – up to £215,000.

Tax-free cash: You will be able to take 25% of the total fund, as applies to personal pensions now. But get advice.

Investment freedom: If you have a personal, self-invested or defined contribution fund you will be able to invest the money almost without limit. But you will have to pay rent if you put your home into your pension.

Annuities: No longer compulsory at age 75, if you use an “alternatively secured pension", which enables you to keep unspent money in your estate when you die.