Restriction on pension tax relief - pages 7-9
As was expected the annual allowance for tax relief on pension contributions is reducing from the current limit of £50,000 to £40,000. This won't take effect until 6 April 2014 but will apply to pension input periods ending in the 2014/15 tax year, so for existing pension plans that started before 6 April 2011, it will affect pension input periods starting after 6 April 2013 as these will normally end after 6 April 2014.
For carry forward purposes, the limit to be used will remain at £50,000 for pension input periods ending in tax years 2011/12 to 2013/14 and reduce to £40,000 from 2014/15.
Restriction on pension tax relief - pages 3-6
This was more of a surprise. The lifetime allowance is reducing from £1.5 million to £1.25 million. Again, this will be effective from 6 April 2014 and protection will be available. Given the various types of protection from the lifetime allowance charge that already exist, they were obviously running out of ideas of what to call this new protection and all they could come up with was 'fixed protection 2014'.
This will allow individuals to apply to retain a lifetime allowance of £1.5 million after 6 April 2014. Applications must be received by HM Revenue and Customs (HMRC) by 5 April 2014 and application forms will be available on HMRC's website after the Finance Act 2013 comes into force, which will probably be in July 2013.
The same restrictions that apply to the existing fixed protection will apply to fixed protection 2014, including losing it if further pension contributions are made after 6 April 2014.
However the Government also announced that they will discuss with interested parties whether to offer a personalised protection option in addition to fixed protection.
This will give individuals a lifetime allowance of the greater of the value of their pension rights on 5 April 2014 (up to an overall maximum of £1.5 million) and the lifetime allowance (£1.25 million from April 2014). However unlike fixed protection 2014, individuals with personalised protection can carry on saving in their pension plan without losing their protection.
Personalised protection will only be available to those with pension pots over £1.25 million on 5 April 2014.
Autumn Statement 2012 - section 2.58
The Chancellor's Statement states that the capped drawdown limit for pensioners of all ages will increase from 100 per cent to 120 per cent of the value of an equivalent GAD annuity. There are no further details at this stage but we understand that draft legislation will be produced soon and will be included in the Finance Bill 2013 following the Budget.
Autumn Statement 2012 - section 1.137
The Department for Work and Pensions will consult on the long-term affordability of deficit recovery plans for defined benefit pension schemes to sponsoring employers. No details are given of when this will be.
The Treasury and HMRC have been seeking the views of interested parties on over 35 of the tax policies announced at Budget 2012. Responses to these consultations will be published on or by 11 December 2012.
Draft legislation for these measures, to be included in Finance Bill 2013, will also be published on that date. This will include draft explanatory notes and tax information and impact notes (TIINs). The draft clauses will be open for consultation until 6 February 2013.
The information provided is based on our current understanding of the Autumn Statement 2012 and associated documents and may be subject to alteration as a result of changes in legislation or practice.