Pension tax support for senior local government officers and staff
14 May 2014
From 6 April 2014 the Lifetime Allowance, the maximum pension savings that an individual can amass and still qualify for tax relief over their lifetime, reduced from £1.5m to £1.25m.
Also the Annual Allowance, which is the maximum contribution allowed into a pension scheme that qualifies for tax relief in any one year, reduced from £50,000 to £40,000.
Many senior local government officers could be affected. Those earning from £95,000 who retire after a full career may now breach the Lifetime Allowance. Senior staff earning over £100,000 a year may breach the new Annual Allowance. Even someone earning £45,000 and receiving a significant promotion could breach the Annual Allowance if he or she has over 20 years’ service.
Because the tax charges can appear very high to scheme members it is likely to lead to a number of members considering their options, including early retirement, flexible retirement, opting out of the pension scheme and even leaving service.
The individuals making these decisions will, by definition, be long-standing, relatively highly paid people who may be critical to the functioning of your organisation.
We are therefore recommending that you proactively engage with anyone that might be affected.
The Government has introduced a way for certain people to protect their Lifetime Allowance by applying for ‘Individual Protection’ from summer 2014.
As a specialist in public sector pensions, MyCSP offers pension tax support services for HR managers and employers to help you and your senior staff to understand these changes and support those who may be impacted. Services include pension tax seminars and one-to-one sessions with senior staff.
If you would like further details on how MyCSP may be able to assist you and your staff with these changes, please read about the services available here or contact us at email@example.com or call us on 01903 835 717.Back to news