The survey report reveals a number of interesting insights, including a rise in contributors and in scheme numbers in the past year. The report also shows average contribution rates separately for DB and DC schemes.
Personal pensions statistics
29 September 2014
HM Revenue and Customs have published some interesting statistical information on personal pensions, based on data that pension schemes are required to report to them.
The HMRC publication starts with some simple “layman’s” definitions of the different types of pension scheme, with the associated taxation and other implications, which could be a very useful source of reassurance for anyone without long experience of the pensions industry. The report also includes some fascinating insights, including details of how contributions from individuals and minimum contributions have both declined over the past 20 years or so in proportion to contributions from employers. It is also interesting to note for example that the peak age groups for contributing were in the 35-44 and 45-54 regardless of gender, maybe reinforcing concerns that younger workers are not as keen as they might be to start saving for their retirement. The research also contains regional comparisons, showing for example that the highest proportion of the adult population contributing to personal pensions is in the South East of England at 13 per cent, while the North East shows the lowest participation, at 8 per cent of adults.
55% tax on pension funds at death to be abolished
30 September 2014
The Chancellor has announced that from April 2015 individuals will have the freedom to pass on their unused defined contribution pension to any nominated beneficiary when they die, rather than paying the 55% tax charge which currently applies to pensions passed on at death.
The Treasury announcement says:
Around 320,000 people retire each year with defined contribution pension savings; these people will no longer have to worry about their pension savings being taxed at 55% on death.
Find out more about how the new pensions system will work and what it means for you - read our eight things to know about the new system .
From next year, individuals with a drawdown arrangement or with uncrystallised pension funds will be able to nominate a beneficiary to pass their pension to if they die. If the individual dies before they reach the age of 75, they will be able to give their remaining defined contribution pension to anyone as a lump sum completely tax free, if it is in a drawdown account or uncrystallised. The person receiving the pension will pay no tax on the money they withdraw from that pension, whether it is taken as a single lump sum, or accessed through drawdown. Anyone who dies with a drawdown arrangement or with uncrystallised pension funds at or over the age of 75 will also be able to nominate a beneficiary to pass their pension to. The nominated beneficiary will be able to access the pension funds flexibly, at any age, and pay tax at their marginal rate of income tax.
CIPP Policy News Journal
08/04/2015, Page 391 of 521
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