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BLYTHE
FINANCIAL
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On
6 April 2001, several big changes happened to Personal Pensions
as well as the relatively minor introduction of Stakeholder
Pensions. |
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With
all the publicity surrounding Stakeholder, it is important to
recognise that it is merely a low cost category of Personal
Pension. |
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The
five big changes to all Personal Pensions are that: |
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•
Virtually
any UK resident under the age of 75 is entitled to contribute
(it excludes members of Occupational
Pension Schemes earning over
£30,000 per annum
and members of Occupational Pension Schemes
who are controlling Directors
- it includes babies!).
•
If you have no earnings, the limit of contributions is £3,600
per
annum although (as in the past)
you can go higher depending on age
and Net Relevant Earnings.
• All
contributions are made net of basic rate tax regardless of the
individual's tax status. Higher
rate tax relief can be claimed from
the Tax Inspector through Self
Assessment.
• Bringing
forward Unused Relief is abolished (see Pensions
- Unused
Relief
& Carry Back).
• You
will be able to use relevant earnings in one year to justify
contributions in each of
the next five years. |
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The
relatively minor factor specific to Stakeholder is that: |
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•
There
is a cap on charges of 1% per annum (some schemes are
offering even lower charges!). |
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This
1% charge sounds good but if professional advice on the Stakeholder
is sought (remember you are in one of the most complex and highly
regulated areas of investment and tax) don't expect the costs
to be covered by the policy commission! |
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The
charge cap will encourage Passive Investment Management (not
necessarily a bad thing) and mass marketing which we are already
witnessing. |
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As
mentioned, pensions are complex and these notes are a brief
summary only. Before taking or refraining from any action, please
contact us: BlytheTax |
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