New Rules

exil

Would it be possible for someone to post a short summary of the new rules due to take effect in April?

My own impression is that now it will be possible to

- save up to £3,600 even with no income
- save up to a max of 100% of income in any one year

How will final salary schemes cater for this - added years, perhaps? Will
there be restrictions on how many years you can buy? In general (I'm not asking for individual advice) would it be better to start a separate private scheme and invest in that instead?

dunstonh

Depends how detailed you want the summary. Most summarys that are arriving in the post are about 20 pages. Even now, we still do not know the full extent of the changes coming in April.

caveat_emptor

exil wrote:

Would it be possible for someone to post a short summary of the new rules due to take effect in April?

Google 'pensions A-day' there's a lot of info there in summary and at length..

dunstonh

I should have added at the time but got interrupted by a phone call..

.. a number of insurance companies have summaries on their client facing websites. Those same 20 page summaries they send us IFAs.

Debt_Free_Chick

exil wrote:

Would it be possible for someone to post a short summary of the new rules due to take effect in April?

My own impression is that now it will be possible to

- save up to £3,600 even with no income
- save up to a max of 100% of income in any one year

How will final salary schemes cater for this - added years, perhaps? Will
there be restrictions on how many years you can buy? In general (I'm not asking for individual advice) would it be better to start a separate private scheme and invest in that instead?

Existing final salary schemes will almost certainly not offer added years - they're trying to limit new liabilities.

What the new rules mean is that you are no longer restricted to saving within the existing pension scheme. Currently, if you earn more than £30k you cannot save outside of the current scheme. After April 2006, you can have a separate private (stakeholder) pension in addition to continuing in membership of the current scheme. This is private matter for you and nothing to do with your employer - you do not need to tell them, if you start a private pension.

As an alternative to starting a private pension plan, your existing scheme may continue to offer an AVC scheme - you'll need to check out the details of the current AVC scheme and any plans for the future, with the pension administrators.

After April 2006, occupational pension schemes will not have to offer an AVC scheme, so some may withdraw current options.

In any event, you will need to look carefully at any AVC option and compare it with the features of a private pension plan.

HTH

exil

Thanks for the advice. My employer's scheme is continuing to offer added years, so I still have that choice to make. I have some savings in other forms (ISAs, building society, endowments). Also a pension fund from previous employment which is "underfunded" so I will lose 30% of its value if I try to transfer the value to my current scheme. Ouch.

I had intended to boost my current pension to its max 40 years using added years, but was rather restricted by the pre-Apr 2006 rules. Should be possible to do this now, and then I can safely leave the old pension where it is, with (I think this is right) there no longer being an overall limit on the years of pension I can get, subject to the overall 1.5 million limit. I will be able to contribute 15% of income to buy added years, which will buy approx 15 years, taking it up to 40 years in total assuming I work to age 63.

Does this sound sensible?

(I have other factors to consider before deciding, eg whether to put money into my partner's pension as well or instead)