Pension Simplification
From 6 April 2006 A-DAY there will be one set of rules for all types of registered pensions,the difference in contributions rates and the maximum benefits payable between personal pensions (PPS),retirement annuities (RA) and occupational (OPS) will disappear.
Instead Individual pensions will have a:
Lifetime Allowance,which is a limit on the tax privlieged amount that can be paid out,and a
Annual Allowance, which limits the amount of tax retievable contributions that can be made each year.
Pensions will be easier to understand.
More individuals will have greater flexibility in the size and timing of their contributions.
In many cases there will be no need to make contributions checks.
Forms of retirement benefits
Schemes will be able to pay out a commencement lump sum up to 25% of the fund value.The remainder must be used to provide an income in the following ways.
Secured -a guaranteed income ( a lifetime annuity or scheme pension)
Unsecured Pension-is a an alternative to buying an annuity.it allowes you to draw an income from your pension funds while leaving your funds invested up to age 75.The maximum income will be 120% of the annnual income available from a single life non-guaranteed annuity based on the individuals age and using Government Actuarie's Department figures (GAD)
After age 75 you have the choice to take an Alternative Secured Pension (ASP) this allowes you to draw an income from your pension without buying a Lifetime annuity.The maximum you will be able to draw will be 70% of a level single life annuity.You can convert this ASP into a Lifetime Annuity at any time.
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