| Pension Simplification |
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| CATEGORIES ABOUT PENSION SIMPLIFICATION | |
| financial services | |
| pensions in the united kingdom | |
| retirement | |
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The new single tax regime will be ''adopted'' on 6th April 2006; this date is referred to as 'A'-day. PURPOSE The aim is to reduce the complicated patchwork of legislation built-up by successive administrations which act as a barrier to the Public when considering retirement planning. Ultimately the government wishes to encourage retirement provision by simplifying the eight tax regimes which currently exist to one single regime for all individual and occupational pensions. MAIN CHANGES Broadly the new regime will allow considerable freedom in the tax relievable contributions that may be made to pension schemes, and the assets in which they may be invested. It also however caps the size of tax favoured pension fund that may be accumulated by an individual. This 'lifetime allowance' has been initially set at £1.5M as of 6th April 2006. Funds accumulated in excess of the lifetime allowance may be subject to a tax charge of 55%. Transititonal provisions have been made for indidviduals who may already have accumulated pension funds in excess of this amount.
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