Taking steps towards a savings protection plan

pensions

After A-Day, pension payouts in breach of the lifetime allowance will be subject to 55% tax, so that people with funds greater than this limit should take steps to protect their savings.

In the new world of pensions tax simplification, from 6 April 2006, A-Day, there will no longer be any limits. All pension arrangements will be able to pay out the full value of the plan. But if that falls over a certain amount, the lifetime allowance, a tax charge of 55% will apply to the excess amount. The lifetime allowance has been set at £1.5m for the tax year 2006-2007, rising in stages to £1.8m by 2010. This has big implications for two different groups of people. The first group is people who currently have funds of around £1.5m or more, and believe they will be taxed after A-Da...