CIRCULARÂ Â Â Â 2013HOC0033MW
21st January 2013
TO:Â Â Â Â Â Â Â Â Â ALL MEMBERS
FURTHER CHANGES TO ANNUAL ALLOWANCE AND LIFETIME ALLOWANCE â€“ NOTE OUTLINING POTENTIAL IMPLICATIONS
On 26 August 2010 CIRCULAR 2010HOC0533MW was issued to members explaining Government proposals to change tax relief on pension contributions. These changes had the potential to affect a wide number of FBU members with significant tax implications for members contributing towards pensions schemes.
These changes reduced the Annual Allowance (AA) limit from Â£255,000 to Â£50,000 per year and the Lifetime Allowance (LTA) from Â£1.8 million to Â£1.5 million from 6 April 2011.
The circular explained that those most at risk would be:
(i)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â members with long service and/or significant promotional or high pay rises;
(ii)Â Â Â Â Â Â Â Â Â Â Â Â high-earners and members with enhanced or primary protection;
(iii)Â Â Â Â Â Â Â Â Â Â members retiring on ill health or redundancy grounds.
It also outlined that, although these are the groups of members who are most likely to be affected, there are certain circumstances where other factors may mean that a larger range of members may be liable to a tax charge.
To assist members the union produced a bulletin which explained AA and LTA and the potential impact of the changes using a series of examples.
In his 2012 Autumn Statement, the Chancellor announced a further reduction:Â
to be implemented from the 2014-15 tax year onwards.
This will make it even easier for members to exceed the allowance and be hit by hefty tax charges.
To assist members with this issue the union has posted an updated document on the pension section of the FBU website that explains:Â
This note has been produced for the union by First Actuarial.