On 6 April 2006, new rules were introduced to allow increased
flexibility with saving for retirement and drawing retirement
benefits.
Flexible Retirement
Prior to 6 April 2006, you could not access benefits early from
an occupational pension scheme
without either transferring into a personal pension plan or
leaving the employment to which the scheme related. This is no
longer necessary.
Provided the occupational pension scheme rules permit, you can
take all or part of your pension and continue to work in that
employment. It may be that you wish to work part-time and access
part of your pension fund in order to augment your salary.
Concurrency
Prior to 6 April 2006, if you were in an occupational pension
scheme, you could not make additional retirement saving unless you
earned less than £30,000 per annum. This no longer the
case.
It is now possible to pay into as many pension schemes at the
same time as you want, subject to contribution limits (see
below).
Contributions
Prior to 6 April 2006, contributions to an occupational pension
scheme were limited to 15% of earnings in a tax year. For
personal pension plans, contributions were age-related and ranged
from 17.5% to 40%. These limits have been removed.
Now, tax relief is available on contributions of up to £3,600
per annum or 100% of earnings, whichever is greater.
Q & A's
There is now greater flexibility for taking your benefits and
continuing to work. If your employer has adopted the new rules, you
may be able to draw retirement benefits and continue working. It
may also be possible for you to work part-time and access part of
your pension fund in order to augment your salary. You should
contact your employer if this is an option you want to
consider.
Possibly. It may be that your employer has not adopted the new
rule. They do not have to. You should contact your employer to find
out if this is the case and, if it is, whether there are plans to
adopt it in the future.
Possibly. It is possible to draw benefits from the main scheme
and the AVC fund at different times. However, this rule must have
been adopted by the main scheme and included in its rules. You
should check with your scheme to establish what the rules
allow.
Yes. In April 2006, concurrency rules were abolished. It is now
possible to pay into as many pension schemes at the same time as
you want. Contributions to the schemes are not limited but you will
only receive tax relief on up to £3,600 or 100% of your
earnings, whichever is greater. In addition, there may be a tax
charge if you exceed the Annual Allowance
I can only assume at the time the advice was given, you were
exempt from concurrent contributions because you were or had been a
Controlling Director or your earnings were too high.
