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Stakeholder/personal pension maximum contributions
Significant changes are being made to pensions and there are many far-reaching implications for almost everyone.
Employers need to be aware that this legislation will require them to have some suitable form of pension arrangement in place for their employees by 8 October 2001 at the very latest.
Self-employed people, senior executives and directors should also consider how their own personal retirement planning will be affected by the new rules. They should get professional advice to see whether any of the following would be of benefit to them:
- Make full use of the current rules for carry-forward relief before the changes in April 2001 - or 31 January 2002 at the latest.
- Use any existing retirement annuity contracts for carry forward/carry back after April 2001.
- Setting up or increase their life cover and waiver of contribution benefit under the pre-April 2001 rules.
- Use the flexibility of new earnings certification rules to maximise their future tax-effective pension contributions.
- Consider whether pension planning for a non-earning partner or for a child would be worthwhile.
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Four key areas where employers will need to make decisions:- Employers who currently offer pension arrangements to their employees need to consider the changes they should make or whether they intend to offer stakeholder as well. They then need to make all the necessary changes in time.
- Employers without any existing pension arrangements must decide what they will offer and ensure they make the necessary arrangements.
- Employers who currently have money purchase occupational pension schemes should decide whether to keep their existing arrangements, or switch to the new stakeholder/personal regime.
- Employers who offer occupational pension schemes should consider whether many of their employees will prefer to make extra contributions to a stakeholder scheme rather than to the company AVC scheme. They should also consider what impact this might have on the arrangements they offer.
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Making the right decision
Making the right decision and then setting up the appropriate arrangement by the October 2001 deadline should not be left to the last minute. Hurried and probably wrong decision-making can be avoided by planning for these changes well in advance, which means considering all the available options as soon as possible - with the benefit of competent professional advice.
NB: Financial advisers are about to be inundated with enquiries when time is of the essence. You would be advised not to delay contacting your financial adviser to arrange a meeting or continue to our sales site for comprehensive assistance in setting up your desired scheme. |
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