Are UK pensions now simpler and less confusing than in 2006?
Named the ‘A Day’ pension reforms, they were supposed to simplify pensions and make the path smoother and easier for the general person.
Lifetime allowances, tax free lump sums set at 25 per cent and flexible company pension arrangements were put in place.
However, even after this, there have been many changes to this reform and it seems we are even more confused than before. In a report from Unbiased.co.uk, they state that 83 per cent of financial advisors still say that confusion remains regardless of the changes made.
With the emphasis moved away from the state providing solution to the retirement the responsibility has slowly been moved to that of the individual.
The introduction of auto-enrolment, or workplace pensions (NEST) in October 2012 will soon, over the next five years, have millions brought into pension schemes for the first time.
However, the decreasing the annual tax-free allowance appears to have damaged pensions and saving the most.
The new annual allowance, that is the maximum amount someone could save into a pension each year while still gaining tax relief, stood at £215,000 in 2006, but this has now reduced to £50,000 currently and will decrease even further from April 2014 to £40,000.
The new UK workplace pension enrolment program is in its early stages and people will have to wait and see if the government can stop itself from tinkering with it again and allow people enough time to get their heads around the present rules.
If you would like any further help or advice to do with your retirement planning or discuss the new workplace pension schemes, then please contact one of our financial planners or visit our download page on the website.