After the announcement last year the following key changes to Finance Bill for 2011 are as follows:
Annual Allowance
Annual Allowance will be reduced to £50,000 (from £255,000) for the tax year 2011-12. Tax relief will continue to be available at the individual’s highest marginal rate.· Unused annual allowance for up to 3 years may be carried forward where pension contributions/savings for the current year exceed the annual allowance i.e. you will be able to carry forward from the tax years 2008/09, 2009/10 and 2010/11 using an annual allowance of £50,000 for each of those years.· No annual allowance test will take place in the year of a member’s death or where serious ill-health benefits are paid.· The existing flat 40% tax charge will be replaced by a variable tax charge of up to 50% designed to cancel out any tax relief on excess provision above the annual allowance
Pension Input Period
Existing rules for pension input periods will remain the same.· Transitional rules will be put in place for those schemes where the period started prior to 14 October 2010 and will end in the 2011/12 tax year to reflect the reduced annual allowance for the period from 14 October 2010.· Those whose pension input period starts on or after 14 October 2010 will be subject to the reduced annual allowance of £50,000 for the whole of the input period.
Lifetime Allowance
The Lifetime Allowance will be reduced from £1.8m to £1.5m with effect from April 2012.The Lifetime Allowance tax charges will remain unchanged at 55% where the excess is taken as a lump sum and 25% where it is taken as an income.· Pension commencement lump sum will remain at 25% of the member’s available standard lifetime allowance.· The link between the LTA and trivial commutation will be removed from April 2012 with the limit remaining at £18,000 instead of 1% of the Lifetime Allowance.· Those with pension benefits in excess of £1.5m will receive protection subject to a cap of £1.8m.
Compulsory Annuitisation Abolished
No need to annuitise at any age with effect from 6th April 2011.· Tax free lump sums will be allowed beyond age 75. · Alternatively Secured Pensions (ASP) will be scrapped and replaced by lifetime capped income drawdown.· Capped income drawdown will allow annual withdrawals between £0 and 100% of the basis amount (GAD maximum), which is broadly in line with the amount that an annuity would pay. The current upper limits are 120% pre age 75 and 90% after age 75.· The need to take an income of 55% of the basis amount after age 75 will be scrapped. · The capped drawdown limit (basis amount) will be reviewed every three years before age 75 (rather than every five years) and every year after age 75.· A new flexible drawdown option will be introduced, allowing withdrawals above the capped drawdown limit as long as a minimum guaranteed lifetime income of £20,000 can be confirmed.· Tax on death benefits from benefits already drawn down (vested) will be charged at a rate of 55%, regardless of when death occurs. The lump sum paid on death won’t form part of the individual’s estate for inheritance tax (IHT) purposes.
January 28th, 2011
The Minerva SIPP can invest in a wider range of assets including commercial property and land, on an individual or group basis. Any combination of permitted investments may be made within a Minerva SIPP including deposit accounts, DFM, open market platform/wrap accounts, stockbroker accounts and trustee investment plans, all held together within the same SIPP.
SIPP Lite is a lower cost option, for those that do not require multiple investment accounts, or access to commercial property and land at outset. SIPP Lite members are restricted to a maximum of one investment account, to run alongside the default SIPP bank account. This investment account could be another bank account or ONE of the following: stockbroker account, DFM, open market platform/wrap account or a trustee investment plan. For individuals that require additional investments at a later date, including commercial property and land, they can upgrade their SIPP Lite plan to a Minerva SIPP.
A Small Self-Administered Scheme (SSAS) is a type of UK registered pension scheme. Each SSAS is governed by its own trust deed and rules and is a separate legal entity to the sponsoring employer. The sponsoring employer establishes the SSAS and invites members to join. Any individual employed by the sponsoring employer (or a participating employer) may join the scheme and all members are appointed as trustees alongside the professional trustee. SSAS trustees have a very wide range of investment options, including the ability to make secured loans to the sponsoring employer of up to 50% of the net asset value of the scheme, subject to certain conditions.
We have been operating in these markets for over 20 years. The SSAS business was formed in 1997, and in 2003 we launched our flagship product, the Minerva SIPP. The range is completed by SIPP Lite, which has been available since July 2012.
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