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In a bid to make saving for retirement more palatable, the biggest ever shake-up of the private pension system happened yesterday. If you blinked and missed "A Day", here are the main points:  The different ways of saving for retirement - company schemes, personal plans, or "stakeholder pensions" - are now covered by one set of rules. These are still fiendishly complicated, but it's a start.
It's now possible to be paid a pension and carry on working, which was banned before.
It was compulsory to swap personal pension savings for an annual income (an annuity) by the age of 75. The better-off now have the option of keeping most of their retirement savings intact, forever.
You can now pay into an occupational (company) pension and have a personal pension. Anyone earning £30,000 a year or more used to have to choose.
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Complicated age-banded limits governing how much of your income could go into a pension have been swept away and replaced with a single annual limit: £215,000.
There's also a "lifetime limit"of £1.5m to stop the rich claiming unlimited tax breaks.
Many people hoped buy-to-let properties and holiday homes would count as pension investments (as well as racehorses, jewellery and art). The Chancellor stamped on these plans. A partial climbdown means residential property is allowed - but only in a syndicate.
Previously reserved for the rich, self-invested personal pensions (Sipps) are now being sold by the lorryload. They offer a "pick and mix" approach. So you could be in a company pension scheme but also have a Sipp to look after your other interests - stocks and shares, or perhaps a stash of gold bullion and some commercial property.
FIRST POSTED APRIL
7, 2006 |
