The following pensions changes announced in the 2014 Budget. Please note that the legislation is expected to be passed later in 2014, but will be backdated to 27th March.
The maximum amount which an individual may take each year from an income drawdown arrangement has increased from 120% to 150% of an annuity value calculated using annuity rates provided by the Government Actuary’s Department (GAD). This applies for all drawdown pension years starting on or after this date.
The amount of money which may be released under small pot lump sum rules has increased from £2000 to £10000. Small lump sums can be paid regardless of an individuals total pension savings.
The first 25% is paid tax-free and the remaining 75% is taxed at the individuals marginal rate of income tax. This will apply to all payments made on or after this date.
The maximum number of pension pots you can take as a small pot has been increased to three from the previous limit of two. Any occupational pension schemes do not count towards this limit and you can still take one small pot from each occupational scheme you are a member of.
The amount of money which may be released in cash under the trivial commutation rules has increased from £18000 to £30000. A trivial commutation amount can be paid from age 60 and the total value of all pension funds must not exceed £30000. The first 25% is paid tax-free and the remaining 75% is taxed at the individuals marginal rate of income tax. This will apply to all commutation periods starting on or after this date.