Important Self Invested Personal Pension (SIPP) legislative changes
Reduction in the Lifetime Allowance
HM Revenue & Customs (HMRC) changes to the Lifetime Allowance came into force on 6 April 2012.
The Lifetime Allowance sets the level of benefits that can be drawn from all your pensions without incurring a tax charge. The Lifetime Allowance was reduced from £1.8million to £1.5million from 6 April 2012 for the 2012/13 tax year.
You may have already applied for Fixed Protection from the HMRC to reduce or eliminate any additional liability caused by the reduction in the Lifetime Allowance. If you have not already applied you will no longer be able to do so.
Small pension pots
It may be possible for you to take your pension benefits as a cash sum if the value of all your pensions including pensions in payment are below a certain value. This is known as Triviality.
From 6 April 2012 the limit where this option would be available will change from 1% of the Lifetime Allowance to a set figure of £18,000.
Removal of Protected Rights
Protected Rights benefits were built up from contracting out of the State Second Pension, formally known as SERPS. From 6 April 2012 the government effectively abolished Protected Rights. This means that a number of restrictions which applied to Protected Rights benefits were removed:
- Individuals who are married or in a civil partnership who are taking benefits were required to include a 50% dependant’s pension on death
- Protected Rights benefits had to be identified separately from Non-Protected Rights benefits
As a result, going forward J.P. Morgan will close the J.P. Morgan SIPP Protected rights and now offers only the J.P. Morgan SIPP.
Please remember that the value of investments and the income from them can go down as well as up, and you may not get back the full amount invested. The tax benefits and liabilities will depend on individual circumstances and may change in the future.
Past performance is not a guide to the future.