Budget 2007

Registered Pension Schemes

Thereafter reviewed every five years

Annual allowance

Personal contributions to all registered pension schemes

• Tax relief on the lower of 100% of annual earnings² or the annual allowance

Employer contributions

• Unlimited
• Contributions in excess of annual allowance charged to tax at 40% on the member

Measurement

• Measured against pension contributions
  • defined as total contributions to money purchase plans, plus annual increase in defined benefit rights
  • annual increase in defined benefit rights valued at £10 for every £1 pension
  • includes additional voluntary contributions to money purchase schemes
  • excludes contracted-out rebates
  • excludes additional voluntary contributions to buy added years
• None in year all pension benefits are taken or in year of death

¹ Total of personal and employer contributions.
² If no earnings, £3,600 a year and for relief at source arrangements only.

Lifetime Allowance

• Based on value of benefits taken at crystalisation.
• Scheme funds in excess of the lifetime allowance subject to a charge when benefits paid out:
  • 55% if excess funds are taken as cash
  • 25%, plus income tax at marginal rates, if taken as income.
• Includes the value of contracted-out rights.
• Defined benefits rights valued at £20 for every £1 pension.
• Pensions in payment at 6 April 2006 valued at £25 for every £1 pension.
• Pension fund withdrawal in payment at 6 April 2006 based on maximum income available at last review date valued at £25 for every £1 pension.

The figures shown here are subject to ammendment as the Finance Bill passes through Parliament.

This information has been prepared only as a topical guide to tax and personal financial matters. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material contained in this publication.