rda - pensions - basic overview

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			Basic Overview All pension schemes must be Registered Pensions Schemes and contributions are controlled by two allowances:- Annual Allowance – the amount you can invest each year. The maximum amount of contribution that can be made in any one year on which tax relief may be obtained is currently £235,000. If your earnings are less than this, then you will get tax relief on the amount of contributions up to your earnings. The first £3,600 of any contribution always gets tax relief even if you have no earnings. For pensions provided on a Defined Benefit basis, the value of benefits accrued each year will be translated into a notional fund, which is then used to assess your position re the Annual Allowance. Any contributions above the Annual Allowance will be taxed at 40%. It is also possible to move money from savings to pension and benefit from tax relief in the process. Contributions can also be made on behalf of third parties, such contributions are treated as having come from the member for purposes of tax relief. This offers scope for people to fund their spouses and dependents pension. All these areas should be discussed with your Financial Adviser.
			Lifetime Allowance – the overall fund size limit. The Lifetime Allowance is currently £1,650,000 any pension funds in excess of this will be taxed when you take benefits. If you have multiple funds this is an overall limit. For pensions provided on a Defined Benefit basis, the value of benefits will be translated into a notional fund, which is then used to assess your position re the Lifetime Allowance. If your existing funds are above this level or may reach this you should consult your Financial Adviser, you may be able to protect your expected rights. Contact us today