Pension flexibility remains, but the opportunity to make tax relievable contributions is set to reduce for those who have accessed their benefits in this way
Wed 23 Nov 2016
In the Autumn Statement, Philip Hammond announced proposals for the pensions Money Purchase Annual Allowance to reduce from £10,000 to £4,000 per annum, with effect from April 2017.
Since April 2015, pension savers have enjoyed increased freedom of choice in how they access their pension savings. This has given them the opportunity to structure their retirement benefits to meet their individual needs.
However, once their pension has been accessed in this way, any further tax-relievable pension contributions are limited to the Money Purchase Annual Allowance (MPAA), currently set at £10,000 per annum. HMRC introduced this measure to discourage earners over 55 from taking benefits from their pension and then reinvesting the proceeds in order to receive further tax relief.
The Chancellor confirmed proposals for the MPAA to be reduced to £4,000 in April 2017. So now is the time to consider whether you should make a further pension contribution in the current tax year, as the higher allowance of £10,000 is still available until 5 April 2017.
However, the rules and legislation surrounding pension funding remain as complex as ever. To discuss your position and your own circumstances in more detail, please contact Ian Pickford (ian.pickford@mazars.co.uk) in the Mazars Private Client team, for further advice.
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