After weeks of leaks and speculation, Chancellor Rachel Reeves has set out the government’s spending and tax plans. We received several queries from members seeking clarification on the changes to pensions. With the assistance of BTP’s Pension Manager, we can offer the following guidance:
Pensions
What isn't changing:
Annual Allowance remains capped at £60,000 with 3 years' headroom retained
Tapered Annual Allowance remains unchanged
Tax-free cash on lump sums remains unchanged - you can still take a tax-free lump sum of 25%
No changes to pension freedoms
What is changing:
From April 2029, the amount an employee can contribute to their pension and receive National Insurance savings will be capped at £2000
This is not a cap on how much employees can put into their pension; it is a cap on how much National Insurance savings can be made
Please note the change doesn't take effect till April 2029
Answers to many common pension questions are available here. You can also either post a question via the Viva Engage group or contact Pension-Queries@btp.police.uk
Other news from the Autumn Statement:
£150 to be cut from energy bills
State pension set to rise by 4.8%
The national minimum wage will increase for all brackets
Universal Two-Child Credit limit to be lifted
Prescription charges to be frozen in England
Cash ISA limit to be cut to £12,000 except for those 65, with the overall £20,000 limit remaining unchanged
Student loan holders will experience an increase in repayments
Income and National Insurance thresholds frozen till April 2031 - please note that Scottish income tax bands and rates differ
Electric Vehicle Owners to be taxed 3p per mile - how this will work in practice has not been decided, but you can have your say by contributing to the government consultation