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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.