Spring Budget 2023: Changes to pensions and the actions employers should be taking

March 28, 2023
Parminder K Latimer


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The changes particularly affect employees retiring before 05/04/2023  

In this year’s Spring Budget, the Chancellor decided to meet expectations by increasing the amount that can be saved into a pension scheme from £40,000 to £60,000 per year, but unexpectedly, removed the lifetime allowance tax charge in April 2023, together with abolishing the lifetime allowance in April 2024.  The Conservatives won the vote to implement these changes on 21 March 2023.

What does this mean for Employers, Human Resource teams, trustees of pension schemes:

  • You will need to understand the changes to taxation of pension benefits to prevent having to rework plans and retirement figures for members approaching retirement this tax year (before 5th April 2023)
  • Consider whether your pension scheme needs to adjust its scheme benefit designs
  • Consider member education for those who might be caught by the lifetime allowance tax charge if they retire before 5/4/2023, who may not incur the charge if they retire after 5/4/2023
  • Consider member communication so members are made aware of their tax-free allowances to encourage greater retirement savings (and also capture employees that may still be negatively impacted by the tax thresholds).  But be aware not to be seen to be giving financial advice, which could give rise to member complaints – that could be a costly and time consuming mistake and to be avoided !)
  • Review life assurance arrangements to ensure these are being provided in the most efficient way

At gunnercooke, the pensions team can help you to understand these and other far reaching pension tax changes.  If you would like to discuss how we can help you, please contact Parminder K Latimer here.

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