Enable Independent were pleased to see that the Government is considering removing requirements for employers to enroll people who have had a lifetime allowance protections in place. As people who have a lifetime allowance ‘fixed protection’ could face huge tax bills if their employers accidentally enroll them into a pension scheme.
The reason this will happen is because their fixed protection will become void if they make any additional contributions, and any pension savings would be taxed at 55%.
They Government are going to discuss making the auto-enrollment scheme easier for employers to understand the rules. As well as allowing people to permanently opt out of schemes rather than being enrolled after three years.
The Government is considering removing the requirement for employers to automatically enroll people who have lifetime allowance protections in place. The idea will be floated in a consultation next month outlining ways to simplify auto-enrollment rules for employers.
However if you are in a defined contribution scheme and have not got a lifetime allowance in place then you will be able to get tax relief as a percentage of your earnings. This means that money that would have previously gone to into tax will now go into your pension. Under the new pension changes the government has set a minimum percentage that has to be contributed in total, these contributions will come from you, your employer and from the tax relief and will be worked out as a percentage of your earnings.
If you need help working out what these changes mean to you, or are worried about your lifetime allowance protection then contact Enable, Independent Financial Advisor's in Bishop's Stortford.
Readers might also be interested in: How much will be paid into my pension pot under the auto-enroll scheme?
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