Net income in the tax year 2020-21 Pension savings in the tax year 2020-21 Threshold income in the tax year 2020-21 Adjusted income in the tax year 2020-21
• • • •
Individuals will have a reduced or, ‘tapered’ annual allowance if both of the following are applicable in tax year 2020- 21:
• Their threshold income exceeds £200,000 (this was previously £110,000) • Their adjusted income exceeds £240,000 (this was previously £150,000)
Individuals won’t be subject to the tapered annual allowance if their threshold income for the year 2020-21 is £200,000 or less, regardless of what their adjusted income is.
For individuals who are subject to the tapered annual allowance, for every £2 of their adjusted income that exceeds £240,000, their annual allowance for that year will reduce by £1. The minimum figure that this could reduce to was £10,000 for tax year 2019-20 but will be £4,000 for tax year 2020-21.
There are a couple of examples provided, that help to illustrate how this works in practice.
For individuals who have made pension savings above their available annual allowance, they should include the excess figures on their Self Assessment return.
The team further advised that a summary of the changes announced at Budget would be included in the next publication of the Pension Schemes Newsletter, which is due for publication in the week commencing 23 March 2020. All associated Gov.UK guides will be updated in time for 6 April 2020, in line with the new tax year.
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The Pension Regulator allows defined benefit schemes to delay transfers by up to three months 31 March 2020 In response to the ongoing COVID-19 crisis, The Pension Regulator (TPR) has published new guidance which will allow employers to temporarily cease their defined benefit (DB) responsibilities for a period of up to three months. DB schemes will also be able to delay member requests to transfer out of the scheme for the same period. The moves are aimed to provide trustees with a longer timeframe in which to calculate Cash Equivalent Transfer Values (CETVs), due to the economic uncertainty caused by coronavirus. There have been significantly more requests for CETVs which has placed pressure on the teams responsible for providing such calculations. It is hoped that the three-month delay will give schemes sufficient time to focus on other tasks such as pension payroll and retirement quotations.
It will also make it harder for individuals to be targeted by scammers, who prey on the vulnerable in times of crisis, and to prevent rash financial decisions being made as a result of concern over the spread of the virus.
The guidance from TPR states that, where absolutely necessary, employers and scheme trustees could place pension funding payments on hold and delay submission of recovery plans where such information is currently expected by the regulator. Guidance released a week earlier stated that a suspension or reduction in the contributions to DB plans “may be appropriate” but this has since been altered to state that trustees “should be open” to requests of this nature. The Financial Adviser reported that the executive director of policy at TPR, David Fairs, said:
“The significant measures and clear guidance we are announcing reflect the unprecedented and challenging situation trustees and employers find themselves in.
The current scheme funding regime is flexible enough to cope with the impact of a severe economic downturn. However, we are actively considering what additional support and guidance we need to provide now so that those who
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