We all know that the Ides of March fall on the 15th March – Julius Caesar was murdered on that day in 44 B.C. when Roman senators raided the Curia in Rome, a raid immortalised by Shakespeare. Then there was the French 48-hour raid into England on the Ides of March in 1360, pillaging and murdering, while our king Edward III was abroad doing likewise to the French in France! But this year, on the 23rd March (well, almost on the Ides, isn’t it!), there could be another type of raid … this time by the British Chancellor on British pension pots in his Spring 2022 Forecast.
Many pundits are suggesting that when Rishi Sunak runs through his options, he could announce another raid on people’s pension pots – sitting targets for any Chancellor endeavouring to recover from the record amounts the government borrowed during the pandemic, and to fund the interest on that debt in the context of interest rates now rising. So how could pensions be affected?
(*) He could reduce tax relief on pension contributions.
(*) He could reduce the Pension Annual Allowance (£3,600 or 100% of your relevant earnings, whichever is higher – up to a limit of £40,000).
(*) He could make pension pots liable to Inheritance Tax.
He has already frozen the Pension Lifetime Allowance (PLA) at £1,073,100 until 2026. That limit could be breached over time and, if it is, a 25% tax charge could be incurred if the excess above the PLA is paid as a pension or a 55% tax charge if paid as a lump sum. If your pension pot risks challenging the Pension Lifetime Allowance, consider Isa’s as a way of saving for your retirement.
With the Ides of March on the horizon, our recommendation is that you review your pension planning in the context of your financial planning goals to ensure that you are contributing a sensible amount into your pension pots in the context of the pension allowances.
NB The notes above are necessarily brief and only cover some of the main points. If you think any of the above may apply to you, we recommend that you take timely advice from an appropriate professional adviser.
And remember, we are here to help so please do not hesitate to contact us regarding your pension and financial planning situation. Reviews and our Lifetime Financial Planning Service are all part of our added-value services for our clients.
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Barry Fleming & Partners are an independent financial advisor specialising in ISA’s, Pensions, Tax, Trusts, Estate Planning, Inheritance Tax Planning (IHT) and other Financial Planning areas. Please don’t hesitate to call on 01488 608 686 and ask to talk to one of our financial advisors. Alternatively use the contact form on our home page.