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Pension Rule Changes

Pensions have recently been through a number of important changes. To help you understand the new rules, we’ve summarised the major pension rule changes and built useful tools.

2017 pension changes

  • What's changing

    the government has announced it plans to reduce the money purchase annual allowance to £4,000 (currently £10,000)


    6 April 2017

    Who's affected

    anyone who was in flexible drawdown before 6 April 2015, anyone who has flexibly accessed their pension after 5 April 2015 and anyone who plans to flexibly access their pension in the future

    What to consider now

    even though the changes are subject to consultation, it might be wise for investors affected by the money purchase annual allowance rules to consider their pension contribution plans. Those considering flexibly accessing their pension in the future should carefully consider whether any pension contributions they plan to make would be affected

    Annual allowance factsheet

2016 pension changes

  • What has changed

    annual allowance for pension contributions has fallen to as little as £10,000


    6 April 2016

    Who's affected

    potentially anyone with income over £150,000, although those with lower incomes could be caught too

    See how much you can invest

  • What has changed

    the lifetime allowance has fallen from £1.25 million to £1 million


    6 April 2016

    Who's affected

    anyone with pensions that could be worth £1 million+ when they take benefits or reach age 75

    What to consider now

    apply for protection to secure a higher allowance

    Lifetime allowance factsheet

  • What's changing

    the government has been reviewing pension tax relief, one of the most valuable tax breaks. It currently spends £34.2 billion a year and the majority is paid to higher earners. Various options have been reported, including a flat rate of between 25% and 33%, or a flat rate of 20% and tax-free withdrawals


    originally expected to be announced in the Budget on 16 March 2016, but this was not the case. There is a possibility changes could be announced later in 2016, although this has not been confirmed

    Who's affected

    depends on what's announced, but everyone paying in to a pension could be affected

    What to consider now

    even though changes have not been confirmed, and may not be made any time soon, it could still be wise for investors to consider making the most of the tax relief currently on offer.

    Guide to pension tax relief

    Other useful links

    Calculator / How much tax relief is available now?

    See if you could receive up to 45% tax relief now

    Information / How much can you invest in a pension?

    Find out about the pension contribution allowances

    Act now / make a pension contribution

    See how the Vantage SIPP could help you build a bigger pension

2015 pension freedoms

On 6 April 2015, "the most radical changes to pensions for almost a century" took effect. Here is a brief overview, for a full explanation download our pension changes factsheet.

You can take advantage of the new pension freedoms by using the Vantage SIPP.

  • Most pension investors aged 55 or over now have total freedom over how they take their pension.

    Restrictions on how much income can be drawn from pensions have been scrapped - you have the freedom to choose how much income you take from age 55.

    You can choose to:

    • Take the whole fund as cash in one go - 25% tax free and the rest taxed as income;
    • Take smaller lump sums, as and when you like with 25% of each withdrawal tax free and the rest taxed as income;
    • Take up to 25% tax free and a regular taxable income from the rest (via drawdown or an annuity).

    It's also possible to take the tax-free cash straightaway and the taxable income via drawdown at a later date.

    Please remember, your pension should last you throughout your retirement.

    Guide to your options at retirement

  • The 55% pension death tax was abolished on 6 April 2015.

    The new pension rules on death mean any money left in your pension when you die can usually be passed to your beneficiaries tax free. Withdrawals they make will normally be tax free if you died before 75, or taxed as their income (0%, 20%, 40% or 45%) if you died after turning 75.

    Inheritance tax does not usually apply to a pension.

    'What happens to your pension when you die' factsheet

  • Income paid to a spouse or partner used to be subject to tax. They are now free of UK income tax if you die before age 75 and the annuity you have is a lifetime annuity. A joint-life or dependant’s annuity can be paid to anyone after you die, subject to any restrictions of your annuity provider.

    Guide to taking a secure retirement income

  • Everyone can now access free guidance to help them make sense of their options at retirement. This service is called Pension Wise and provided by Citizens Advice Bureau and the Pensions Advisory Service. There is no charge and your pension provider is required to tell you about this impartial guidance. More about Pension Wise.

  • Pension contributions are subject to a £40,000 annual allowance for most people. A new money purchase annual allowance has been introduced for people who have flexibly accessed a pension.

    To find out more about these allowances, request an Annual Allowance Factsheet.

Request full pension changes factsheet