Well I am not sure we were quite expecting that much pensions related activity in the Budget?
In case you missed it some quite significant changes to retirement benefits were announced and will be effective from Thursday 27th March 2014:
- Maximum capped drawdown income increases from 120% to 150% of maximum GAD.
- Trivial commutation increases from £18,000 to £30,000.
- Flexible drawdown MIR reduces from £20,000 p.a. to £12,000 p.a.
- An increase in the size of small pension pots that can be taken as a lump sum. This goes from £2,000 to £10,000 and 3 pots of this size will be able to be taken by an individual - an increase from 2.
The change to maximum GAD will be applicable at the start of the next pension year after 27th March. No doubt your clients would have seen the headlines and you may need to let them know that their increase to 150% will be at the next pension anniversary date.
Please bear in mind that for any of our SIPP clients we will require an instruction to alter the income level i.e. we will not automatically increase this to 150% GAD.
2015 looks to be an interesting year following the release of the Freedom and choice in pensions consultation document and we will be providing more guidance on this in due course.
At this stage what we can say is that both immediate and longer terms proposals appear to offer much needed improved flexibility to pensions and the SIPP market is well placed to benefit from this. With increased options at retirement the need for clients to receive quality financial planning advice remains as strong as ever and we look forward to supporting you and your clients in this process.