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Page 13 of 31
Budget 2007
Registered Pension Schemes
| Tax Year |
Annual allowance1 |
Lifetime allowance |
| |
£ |
£ |
| 2006/2007 |
215,000 |
1,500,000 |
| 2007/2008 |
225,000 |
1,600,000 |
| 2008/2009 |
235,000 |
1,650,000 |
| 2009/2010 |
245,000 |
1,750,000 |
| 2010/2011 |
255,000 |
1,800,000 |
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.
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Tax