Increasing the normal pension age
The Government has now decided to put this into legislation in Finance Bill 2021-22. This will increase the earliest age at which most pension savers can access their pensions. The normal pension age will increase from age 55 to age 57 from 6 April 2028. This may create a problem for those born on or after 6 April 1973 who will no longer be able to access their pension funds at age 55.
Tax exemption for public sector workers receiving uplifted benefits due to the McCloud remedy
New legislation will be brought forward to introduce a tax exemption if public sectors workers receive an uplift in their benefits due to the McCloud remedy. More detailed measures relating to lifetime allowances and additional annual allowances will also be brought into legislation in Finance Bill 2021-22.
Further information will follow for those clients affected by these measures.
Changes to “Net Pay” pension schemes for low paid workers and other reforms
A consultation document was published setting out the Government’s intention to pay pension tops ups from 2025-26 to low paid workers.
Other changes are being consulted on which may see all defined contribution pension schemes move to a Net Pay basis for contribution and new money for HMRC to make reforms to its pension administration systems. This could pave the way for further adjustments to pensions tax relief, but for now there are no major changes which is good news.