experienceandexpertise Pensions Landscape Claire Trott Head of Technical Support

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1 Pensions Landscape Claire Trott Head of Technical Support

2 Agenda Benefits options overview Taxation issues Death of the death tax? Money purchase annual allowance rules.

3 Benefits options overview

4 Options from April 2015 Scheme pension Lifetime Annuity New flexible options Guarantee periods extended Continue in capped dd Provider and scheme specific

5 Options from April 2015 Flexi access drawdown Income withdrawal or short term annuity Uncrystallised funds pension lump sum (UFPLS) 25% tax free 75% taxed PAYE

6 Who can t use UFPLS Primary protection with TFC protection Enhanced protection with TFC protection Lifetime allowance enhancement factor Restricted TFC to less than 25% of UFPLS

7 Taxation issues PS Newsletters 66, 67 and 68 Emergency tax codes Month 1 basis New forms

8 Death benefits

9 Legislation Changes to lump sums Taxation of Pensions Act 2014 Beneficiaries FAD Taxation of Pensions Act 2014 Joint life and annuity guarantee payments Draft Legislation 18 th Feb, enacted 26 th March Finance Act 2015.

10 Tax charges on lump sums Pre 75 Nil if designated within two years 45% if designated after two years, proposed move to marginal rate 2016/17 Post 75 45% for the tax year 2015/16 Proposed move to marginal rate 2016/17 Removal of existing 2 year rule for lump sums No unauthorised payment charge if paid after 2 years Removal of the tax exemptions instead

11 Lump sum applicable A pension protection lump sum death benefit An annuity protection lump sum death benefit A drawdown pension fund lump sum death benefit A flexi-drawdown fund lump sum death benefit A defined benefit lump sum death benefit An uncrystallised funds lump sum death benefit

12 Drawdown for non-dependents Beneficiaries Dependant Financial dependent of the member Nominee Non- dependent, but nominated by the member / administrator Successor Non-dependent, nominated by the nominee / dependant / successor / administrator Member doesn t nominate successors

13 Taxation of beneficiary income Dependent on the age at death of last beneficiary/member Last death pre age 75 Growth tax free within usual pension rules Income tax free no annual limits Last death post age 75 Growth tax free within usual pension rules Taxed at marginal tax rate of beneficiary

14 Death benefit cascade Death - Pre 75 Member Death - Pre 75 Nominee Dependant Death - Post 75 Successor Lump sum Successor Successor Death - Post 75 Successor Death - Post 75 Lump sum Successor Death - Pre 75

15 Existing dependant s drawdown Designated to DD and no income taken New rules will apply no tax if pre 75, marginal rate if post 75 fund No time limit according to Policy dept Designated to DD and income in payment Old rules will apply taxed at marginal rate Second death of an existing dependant New rules will apply No need to pay out as lump sum

16 Lifetime allowance implications New BCE 5C and 5D on death Test on un-crystallised benefits left to dependants or nominees flexi-access drawdown or annuity Test against member LTA Beneficiary liable for payment 25% flat rate charge No test post 75 or crystallised funds

17 MP annual allowance rules

18 The rules Money purchase annual allowance restricted to 10,000 MP contributions in excess are subject to AA charge. Total AA still 40,000 Excess over 10,000 can only be used for FS benefit accrual Excess MP contributions not tested against 40,000 because they have been subject to AA charge

19 The triggers Conversion of flexible drawdown to flexi- access drawdown on 6 April More than the permitted maximum income is taken from a capped drawdown fund after 5 April 2015.

20 The triggers A UFPLS payment is made. Funds are designated into flexible access drawdown and some income is withdrawn. Just taking TFC doesn t trigger on its own

21 The triggers A request to convert capped drawdown fund to flexible access drawdown fund. A standalone lump sum is paid without enhanced protection. Scheme pension with less than 12 members late addition Annuity under the new rules Late addition Can go down as well as up.

22 Reporting Scheme administrator will issue a certificate when benefits flexibly accessed. No certificate will be issued for those in flexible dd already Clients must pass on details to all providers the are contributing to Clients must tell provider of any new schemes they join. Contributions in excess of 10,000 will then be reported on as excess AA payments.

23 Questions?

24 Talbot and Muir Talbot and Muir Limited provides administration to Self Administered Pension Schemes Talbot and Muir SIPP LLP provides administration to Self Invested Personal Pensions. T M Trustees Ltd provides independent trustee service. Whilst we provide technical information, we are not authorised to provide any form of financial or investment advice. We try to ensure that the information provided is correct, but we do not give any express or implied warranty as to its accuracy. The information contained in this presentation does not constitute financial or other professional advice and is based on our interpretation of the relevant HMRC guidelines, which are subject to change. We do not accept any liability for error or omission. Talbot & Muir is the trading name for Talbot and Muir Limited (company number ). T M Trustees Ltd (a limited company registered in England and Wales under company number ) whose registered office is situated at Clarendon Street, Nottingham NG1 5HQ Talbot and Muir SIPP LLP (company number OC306490), is registered in England, registered address 22 Clarendon Street, Nottingham, NG1 5HQ and is authorised and regulated by the Financial Conduct Authority