Budget 2008

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 earnings† 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.

Lifetime allowance

• Based on value of benefits taken at crystallisation.
• 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.

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