AJ Bell Investcentre’s Post

Welcome back to Tech Tuesday! 🖥️ How do lifetime allowance (LTA) protections work under the new pensions regime? 🔍 “Clients holding enhanced protection and any form of fixed protection can now make contributions to their pensions. Before 6 April 2023, this would’ve caused them to lose their protection.” Our Technical Manager, Martin Jones, delves into the different protections in place, explains how the new pensions regime may change the way your clients hold their money, then weighs up the pros and cons: https://lnkd.in/e3TQqAa6

Understanding lifetime allowance (LTA) protections under the new pensions regime 🛡️ With the LTA gone from April 2024, new rules apply – but all previous protections stay intact! Our Technical Manager, Martin Jones, outlines what you need to know about the changes, and why clients may gain a higher lump sum and higher LTA than normal: https://lnkd.in/euZ4eDue

It used to take Department for Work and Pensions (DWP) around a month to process applications for pension credits. That time is now doubled. Why? A surge in applications due to the means testing of winter fuel payments. If you have a relative (like I do) who needs the credit to get the fuel payment, encourage/help them apply as soon as possible. The law of #unintendedconsequences. A change to the #tax and benefits system in one place appears to have overwhelmed the system was in another. The people who suffer? Those who need the help the most. Crowe UK Crowe Global

The new Finance Bill introduces key updates to pensions and PRSAs that could affect you, whether you're an employer or employee. This blog covers the key changes & what they mean for your financial plans. Read the blog and get prepared 👇 #pension #planning #tips #pensionmanagement #finance #advice #save #blog #financebill

The abolition of the lifetime allowance may, at first glance, seem like “tax simplification”, but it actually has a number of potential implications for pension schemes. Further, the new lump sum regime which has been introduced is likely to give rise to a number of complexities for trustees and pension scheme administrators. Read more about it in our new blog by Joshua Kell.

The pensions lifetime allowance may be disappearing from 6 April 2024, but lifetime allowance protections live on. The key benefits of the protections will continue under the new regime. This includes the potential for higher tax-free pension commencement lump sums and death benefits. Fixed Protection 2016 and Individual Protection 2016 will close to new claims after 5 April 2025. The effects of the protections are summarised in our briefing document. https://lnkd.in/e25JQCkz

The new funding regulations - clear and flexible? The consultation response launching the new funding regulations for DB pension schemes published on 29 January contains the word ‘clear’ (or derivatives such as ‘clearer’, ‘clarity’ etc) 34 times and ‘flexible’ (or derivatives) 26 times. These must be important themes the writers of the response (principally the DWP) wanted the pensions industry to take note of. But will the new funding regime truly be clear and flexible? A number of oddities are emerging on a careful reading of the regulations. For example, the new “Low Dependency Funding Basis” is the target funding level that schemes not yet at ‘significant maturity’ need to aim for. It is defined to ensure that “further employer contributions would not be expected to be required”. Now, in actuarial language, “expected to be required” has a definite meaning: that the probability is at any level over 50%. Which potentially could mean a scheme’s funding target is only just better than an even bet of no employer contributions. In principle, a scheme could have a target funding level weaker than its current technical provisions! Flexible?  Yes. Clear?  Not as things stand. Presumably, TPR’s new Funding Code will fill in the blanks and with that, after seven years of waiting, the new funding regime will come fruition.

The beginning of the 2024/25 tax year saw the end of the Lifetime Allowance (LTA) for pensions. To balance out the removal of the LTA, three new pension allowances have been introduced.   As we head into a new era of pension allowances, it’s important to understand the implications of these changes: https://lnkd.in/epnRcSHT

The publication of pension auto-enrolment bill represents a significant moment in the reform of Ireland’s pensions system and will pave the way for up to 800,000 workers to be brought into the pensions safety net.   While the bill sets out Government’s commitment to introduce the new scheme from January, the legislation represents a missed opportunity to provide a more flexible system for employers and employees. Employers will need to assess their current pension arrangements and assess how they will navigate the complex changes required across payroll, finance and HR.    Despite these challenges, it is positive to see pension auto-enrolment being progressed and take one step forward towards creating a fairer and more sustainable pension system.    Our team at Aon Ireland is committed to supporting employers make better decisions as they prepare for the introduction of pension auto-enrolment and build the resilience of their workforce into the future. #AonIreland #HumanCapital #Pensions #betterdecisions

Any business owner operating a Ponzi scheme on this scale would be in prison. Yet our government has operated its public sector pension contributions as one. It won’t end well unless addressed. HM Treasury chose to spend the money it has received over the past 50 years or more by way of pension contributions. So the pension promises – which are legally binding – are “unfunded”. This is a classic description of a “Ponzi” scheme – paying out investors not with the returns of investments, but with contributions from new investors. Coming right up to date, the current annual bill for these pensions for 2024-25, according to the Government, will be a staggering £54.3bn – larger than the defence departmental budget. The Government has chosen to be sneaky in its reporting of these pension costs, because in its accounts it deducts from the pensions bill all the contributions that current employees and employers are paying into the system (even though these should be reserved for their future pensions). So instead of reporting a cost of £54.3bn for 2024-25, it will report a cost of £1.2bn. This is because these pensions contributions will be, according to the Government, about £53.1bn. So each year, the Government borrows the contributions for future pensions and spends it instead of saving it.