Retrospective Tax on accumulated pension/wealth 15 March at 11:16PM in Pensions, annuities & retirement planning 4 replies 355 views

dozywalia

Hi, 
Is it possible for Govt to

1) increase the pension age from 55 to 60-65
2) reduce the LTA
3) reduce the 25% tax free lumpsum.

I am 38, keen to put more money in pension and retire at 55 but worried they will do retrospective changes.

Is it possible?
Many thanks 

NoMore

1) They are already increasing it to 57 in 2028, so yes they could do
2) Did you see the budget today ?
3) Yes they could, after today its set to a maximum of £268275 (it was effectively that today and yesterday as well but that was to do with the LTA which they abolished).

However any changes are unlikely to be retrospective and you should be given notice/possibly protection to be able to change your plans.

In short I would not be too concerned about putting money into pensions, they are too good a tax wrapper to ignore.

BuildTheWall

All three are possible. But how likely?
2 was just removed and the complexity associated with it means, it’s highly unlikely to return. 3 is capped now, so highly unlikely to change. 1 is possible, but no one can predict the future. 

HappyHarry

Anything is possible, you can only plan with what you currently know, and make provision for possible changes.

Just to note;

1. The minimum age to access pensions is already moving from age 55 to age 57. 

2. The LTA is being abolished, so it won't be able to be reduced. Once it has been abolished it will need new legislation to bring it back.

3. As the LTA is being abolished, new legislation is being introduced to cap the maximum tax free cash at £268,275. This could be a long way below 25% of large pension pots. It would also be a relatively easy figure for future budgets to tinker with.

ader42

Also note Labour have said they will bring the LTA back if they get in