Will Brexit derail Pension Freedoms ?
With the vote to leave the EU creating uncertainty in many quarters, some experts have questioned whether pension tax relief and the reforms introduced in April 2015 might come under the spotlight and be subject to change.
The view put forward is that if the government and new prime minister need to make fiscal adjustments to protect the UK economy during it’s withdrawal from the EU, reducing generous pension tax relief, including the treatment of pensions on death, might have a part to play in balancing the books.
The changes that came into effect last year covering the treatment of pensions on death allow the fund to be passed on tax-free when death occurs before age 75, and taxed at the beneficiary’s marginal rate post age 75. The removal or reduction of tax concessions like these would save the Exchequer considerable sums of money.
In addition, the introduction of the secondary annuity market was originally planned for April 2016 but is now due to take effect in April 2017. The Lifetime ISA is also due to launch in April 2017 but similarly could be set to change, especially as key details surrounding the account are yet to be announced.
WHAT THE FUTURE MIGHT HOLD
Former Pensions Minister, Baroness Ros Altmann, has expressed the hope that whatever the economy has in store, we shouldn’t lose sight of the long-term need for pensions, especially for future generations.
The new Chancellor, Philip Hammond has made it clear that he intends to abandon the previous goal of eliminating the deficit by 2020, giving considerable support to the view that pension freedoms may not need to be changed, at least in the short term.
Whilst the economic landscape looks set to face change and upheaval, the key message remains clear; we all need to ensure we’re making adequate pension provision by taking advantage of each year’s tax relief on contributions while we can. It could be a case of ‘use it or lose it’
As one of the leading IFA practices in Greater Manchester, Logic Wealth Planning has a team of experienced Financial Advisors specialising in Wealth Management. Working closely with clients in the Heywood, Rochdale, Bury and surrounding areas across the North West, we believe that however modest your income may be, when it comes to Pensions, Savings and Investments we provide the very best financial advice, ensuring that your money is working hard for you and allowing you to enjoy a comfortable lifestyle right through to and including your Retirement years. For your first meeting with us – entirely free and without obligation – please call us now on 0808 1234 321. We look forward to hearing from you.