Pension tax allowances
Pension tax allowances01/01/2021
If you’re thinking of increasing your pension savings and making the most of tax relief, here’s a reminder about your allowances for this tax year 2021/22.
- Annual allowance (AA)
This is the limit on the amount of tax-free pension contributions you can make in a year. The standard AA is £40,000. For DC savings, this covers the contributions you and NFU Mutual make. For DB savings, it’s the increase in value of your pension benefits over the year, in excess of inflation. If you have both DC and DB savings, you’ll need to add these together.
- AA for high earners
In April 2020, a change was introduced to the limit on the amount of tax-free pension savings you can make in one year if you’re a high earner. If your total income is over £240,000, the AA will be reduced by £1 for every £2 of income over the threshold and could be as low as £4,000. Your AA is personal to you based on all your income, not just your salary from NFU Mutual, so you’ll need to work this out yourself.
- Money purchase annual allowance (MPAA)
If you’ve already accessed some of your pension savings flexibly but are continuing to save into a pension, the MPAA will apply to you. This is currently £4,000.
- Lifetime allowance (LTA)
This is the maximum amount of pension savings you can have at retirement from all UK registered pension schemes without incurring an additional tax charge. It’s currently set at £1,073,100 until April 2026.
Is your expression of wish up to date?
Is your expression of wish up to date?01/01/2021
It’s important to make sure that your expression of wish remains up to date, particularly if your circumstances change, such as if you get married or divorced, enter or leave a civil partnership or have a child.
In the event of your death, the Trustee is responsible for deciding who should receive any discretionary payment that is due, but it takes your wishes into account. An up-to-date expression of wish allows us to quickly and easily identify anyone you have nominated to receive benefits.
You can update your expression of wish at any time by logging into your personal account via My Work Pension.
If you’re an active member, please also complete an expression of wish form for the Excepted Group Life Assurance Trust which is available on My Reward hub. This form will be used in deciding who should receive any death-in-service lump sum, which is provided outside of the Retirement Benefit Scheme.
Did you know you can defer your State pension?
Did you know you can defer your State pension?01/01/2021
Almost half (47%) of 55 to 64-year-olds don’t know that deferring their State pension will increase these payments when they start to claim them, according to research by pension provider Just Retirement.
Putting off the age you claim the State pension means the amount you receive when you do claim it can go up significantly. The State pension isn’t paid automatically, so you need to make a claim to start receiving it. You can delay when this happens, known as deferring your State pension.
With the new State pension now £179.60 a week, deferring for one year can increase the amount you receive by £10.42 a week or £541.84 a year. You can also defer your State pension payments after you start receiving it, although you can only do this once during your retirement. Contact the Pension Service on 0800 731 0469 for more details.
Scams of all types are on the increase. These could be about insurance policies, pension transfers or high-return investment opportunities, including investments in crypto-assets.
Scammers are sophisticated, opportunistic and will try to get personal details or money from victims in many ways. They tend to target people who are feeling vulnerable, particularly in the current climate with many people being at home.
Could you spot a pension scam?
Pension scams can be hard to spot but their effects are devastating, with many people losing their life savings. While promising high returns and low risk, in reality, pension scams can leave you with nothing. In addition, you could then face a high tax bill from HM Revenue and Customs if you withdraw your savings before age 55.
Scams often involve unusual, high-risk investments like overseas property, renewable energy bonds, forestry, parking or storage units. If it sounds too good to be true, it probably is. Anyone can be a victim of a pension scam, no matter how savvy you think you are.
Things to watch out for:
- unexpected contact – cold-calling about pensions is illegal, so just hang up. Similarly, ignore unexpected emails and text messages
- time pressure – time-limited offers such as bonuses or discounts
- social proof – fake reviews
- unrealistic returns – it sounds too good to be true
- false authority – claiming to be regulated
- flattery – being friendly with you to lull you into a false sense of security.
There’s more information about pension scams and how to avoid them published by the Financial Conduct Authority.
Your online benefit statement
Your online benefit statement01/06/2020
Don’t forget that from 2020, benefit statements went paperless and are now issued to members online.
You can see your benefit statement by logging into My Work Pension. If you haven’t already registered to use My Work Pension, please get in touch with the Scheme administrator.