Another Moving of Goalposts for Pension Planning

Written by Karen Bryan

retirement-signI am absolutely sick fed up of the UK Government’s constant tinkering with pensions.

There’s all this talk about how people should put a higher percentage of their earnings into a pension to ensure a comfortable retirement. But when you try to plan your retirement, the goalposts keep changing.

I’ve already been caught out by:

  • The raising of the State Pension age for women from 60 to 65.
  • The raising of the State Pension age for both sexes to 66.
  • The number of years of National Insurance Contributions required for a full State Pension being increased from 30 to 35.
  • The abolition of Class 2 National Insurance Contributions in April 2018.

Next up, the announcement in the Chancellor’s Autumn Statement on 24 November 2016 of the intention to reduce the maximum contribution on which tax relief can be claimed once you start to take income from your personal pension from the current £10,000 to £4,000 from April 2017.

I bought an annuity right after my 55th birthday in April 2014. My plan was to supplement that income by keeping working and paying at least part of my earnings into a personal pension to boost my income in later years once I stopped working.

My decision to keep paying into a personal pension was based on the combination of:

  • Getting 20% tax relief on 100% of my earnings (up to a maximum of £10,000) of which 25% could be taken as a tax-free lump sum.
  • Having flexible access to my pension pot through income drawdown.

Yet another one of my retirement plans in tatters due to circumstances outwith my control.