Pensions Weekly Update – 22 March 2023

March 2023
Region: Europe

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

HMRC’s Newsletter 148 clarifies some issues resulting from changes to pensions tax allowances announced in the Spring Budget 2023 (which we noted in last week’s alert). For some individuals, gates have reopened to making new savings in registered pension schemes. Financial advisers will be busy assisting high-earning individuals to understand their options in the short term (e.g. before the end of this tax year) and in the longer term. In the meantime, here are some of the pressure points for trustees and sponsoring employers.

  • Expect an increase in questions, especially around joining or rejoining a pension scheme.
  • Ensure that administration systems are equipped to deal with changes to the annual allowance (including the money purchase annual allowance and the tapered annual allowance), the lifetime allowance and the cap on the tax-free lump sum.
  • Consider the impact on pension scheme communications, including scheme booklets/website and benefit statements.
  • Particular care should be taken where the current allowances are incorporated into scheme design or documentation – beware of unintended consequences.
  • Note that some members may now wish to defer their retirement plans to a future tax year.
  • Benefits that fall outside of registered pension schemes (such as excepted group life assurance arrangements and unregistered top-up schemes for high earners) should be reassessed in light of the pensions tax changes.
  • Be careful not to stray into areas of financial advice when dealing with individual members or employees.

This is a significant change to the taxation of pension savings. Consider seeking advice on the impact of these budget changes.

If you would like specific advice on any of these issues or on anything else, please contact a member of our Pensions team.

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