Budget 2014: immediate changes for pension schemes

By Jennifer Bell

This week’s Budget has brought major change to the world of pensions. The headline policy is that individuals will, from April 2015, have full flexibility in what they do with their defined-contribution (DC) pension pots, with no requirement to purchase an annuity or enter into a drawdown arrangement. As a precursor to that, relaxations are being introduced from 27 March 2014, which will allow more members to take all their benefits as lump sums and make drawdown more widely available.

Many schemes will want to offer their members access to these options as soon as possible. As well as being popular with members, it will mean far fewer low-value benefits for schemes to administer. Some schemes will have sufficiently wide provisions to allow this; others may need amending.

New rules are also being introduced immediately to close a loophole used in pension liberation arrangements as well as giving HMRC wider powers to refuse to register pension schemes. Further changes will follow in September 2014, introducing a ‘fit and proper person’ test for scheme administrators and allowing tax relief where a pension liberation arrangement is reversed…

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