2015 PENSION CHANGES ‘Lamborghinis for all……’ New UK Pension Rules 2015 Pauline Curran Director The Fry Group (Belgium) Ben Lester Business Development Manager Brooklands Pensions Q & A at end Please hand in feed back sheets An introduction to The Fry Group (Belgium) TFG Established in the UK in 1898 Traditionally looking after UK Expats abroad and then returning home Assets under management £1.3 billion UK Chartered Financial Planning Firm Offices in UK, Hong Kong, Singapore, Cyprus and Belgium In Belgium since 1996(Fulcra International) UK Pensions – Brief Summary Occupational - Defined Contribution (Money Purchase) - Defined Benefit (Final Salary) Personal (Money Purchase) Traditionally a tax free lump sum plus taxable income Income for life (annuity) Drawdown from fund ‘capped’ income levels April 2015 - What are the Changes? Increased flexibility from age 55 Whole pension fund can be taken as lump sum No requirement to draw income Changes to taxation on death Changes to beneficiary definition on death Applies to Defined Contribution (Money Purchase) schemes only Restrictions on transfers from Defined Benefit (Final Salary Schemes) What are your options? Flexible withdrawals from your fund (a ‘pension bank account’) Annuity (income for life) Capped drawdown ………………..and for existing retirees Existing drawdown – continue or convert Existing annuity – continue or convert (draft legislation only) Flexi-access drawdown (FAD) No minimum income requirement No maximum income No annual reviews 25% of each payment tax free, balance taxed as earned income New (lower) contribution limits for those continuing to pay into a pension For adviser use only What are the pitfalls? Tax implications Practical Issues Beware of ‘scams’ Advice important if you want to make future contributions Tax Implications UK Belgium Double Taxation Agreement (DTA) Tax implications – UK Personal allowance £10,600 from April 2015 Income taxed at your highest marginal rate Any other UK taxable income? UK rental property Other UK pensions commenced post 1 January 2013 Example Pension fund value £40,000 no other UK income whole fund taken as lump sum Fund value Tax free lump sum (25%) £40,000 £10,000 Taxable lump sum (75%) £30,000 Less personal allowance 2015/2016 £10,600 Net taxable £19,400 Less tax at 20% £3,880 Total net payable plus tax free lump cash £26,120 £10,000 Total net proceeds £36,120 Example Pension fund value £40,000 no other UK income fund drawn over 3 tax years (tax free) Fund value Tax year 2015/2016 40000 Tax year 2016/2017 25866 Tax year 2017/2018 11466 Tax free lump sum (25%) £3,533.33 £3,600 £466 Taxable lump sum (75%) £10,600 £10,800 £11,000 Less personal allowance 2015/2016 £10,600 £10,800 £11,000 Net taxable £0 £0 £0 Less tax at 20% £0 £0 £0 Total net payable £10,600 £10,800 £11,000 plus tax free lump sum £3,533.33 £3,600 £466 Total net proceeds £14,133.33 £14,400 £11,466 TOTAL = £40,000 Tax implications – Belgium Must inform Belgian tax authorities Individual advice advisable Practical Issues Expect delays in the administration process Existing pension may not allow the flexibility May need to transfer to alternative arrangement Beware of Scams Cold calling Adverts Regulated Financial Advisers authorised in Belgium by Financial Services and Markets Authority (FSMA) Deaths Death before age 75 From April, benefits paid on death before 75 will be tax free in the hands of the recipient Applies to drawdown and lump sums No longer limited to dependants pension, can also be paid to a ‘nominee’ or their ‘successor’ Deaths Death after age 75 From April, benefits paid on death after 75 will still be taxed differently depending on how they are paid Drawdown (and annuities) will be taxed at recipient’s marginal rate Lump sums will be taxed at 45% Lump sum tax charge will reduce in 2016 to recipient’s marginal rate Triviality and Small Pot lump sums Triviality – less than £30,000 (total value of all UK pensions) Small pots – up to 3 pensions if less than £10,000 each Can combine triviality and small pots Doesn't affect future contributions No need to transfer first Summary Major changes Increased flexibility Tax consequences Professional individual advice important How can we help Retirement planning Pensions Belgian UK Cross Border Personal and Corporate Clients Asset Management Retirement planning and pensions Helping you coordinate your retirement strategy: Review of existing pensions Consolidation of pensions Pension projections Calculating pension shortfall Implementing a wealth management strategy Regular Retirement Planning Workshops Compliance Please note that this presentation is for information only and does not constitute advice. Individuals should seek professional advice based on their circumstances. The information contained in this presentation is based on our understanding of current pensions and taxation legislation both of which are subject to change. The Fry Group of companies comprises of Wilfred T. Fry Ltd – Taxation Consultants, Wilfred T. Fry (Executor and Trustee) Ltd, The Fry Group (H.K.) Ltd, The Fry Group (Belgium) SA, and Wilfred T. Fry (Personal Financial Planning) Ltd. The last company is authorised and regulated in the UK by the Financial Conduct Authority is also passported under EU regulations and is authorised to act as a financial adviser by the Monetary Authority of Singapore-license number FA095023. The Fry Group (H.K.) Ltd is authorised to conduct investment business by the Securities & Futures Commission (SFC) in Hong Kong and are members of the Hong Kong Confederation of Insurance Brokers. The Fry Group (Belgium) SA is regulated in Belgium by the FSMA (Reg. No. 23345 A-B) and is also passported under IMD EU regulations. All levels and basis of, and relief from taxation illustrated here are subject to change without notice.
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