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22 November 2017

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A quiet Budget for pensions

The Autumn Budget 2017 included little on the subject of pensions. However, you should be aware of a few developments.

The Chancellor of the Exchequer, Philip Hammond, delivered the first Budget of the new government on 22 November 2017.
As with other recent Budgets, there had been rumours of tax relief changes, but they failed to materialise. And there were no other significant pension-related announcements.

However, the Budget did confirm that: 

  • The basic State Pension will increase by 3% in April 2018, in line with the triple lock; and  
  • The Lifetime Allowance will increase by 3% to £1,030,000 from 6 April 2018.

In other pension news…

The reduction to the Money Purchase Annual Allowance (announced in the Spring Budget) has recently been brought into law. 
As a result, the Money Purchase Annual Allowance is now £4,000, effective from 6 April 2017. 
What is the MPAA?
The MPAA is the amount you can save each year before tax into a money purchase (or ‘defined contribution’) pension arrangement, such as Brass, AVC Extra or the IWDC Section. 
However, the MPAA will only apply to you if you’ve already taken some of your pension savings using one of the following options: 
  • a full cash payment of more than £10,000,
  • a drawdown arrangement (i.e. taking a series of cash lump sums), or
  • an annuity where the income can be reduced

If any of these types of payment have triggered the MPAA, the scheme in which this was done should have written to you to tell you about this.
If you trigger the MPAA, you can continue to pay up to £4,000 tax-free into other money purchase pension arrangements each tax year. Tax will apply to any contributions over £4,000.


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