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Freedom and choice

Freedom & choice

Changes to Defined Contribution Schemes

In the 2014 budget the Government announced reforms to defined contribution schemes, like personal pensions. These reforms are effective from 6 April 2015 and give members of such schemes, aged 55 or over, greater flexibility over how they can access their pension savings. However, even under the new flexibilities, HMRC rules require that anything above 25% of pension savings will be taxable as pension income at a member’s marginal rate.

To help people understand their retirement choices from schemes offering the new flexibilities, the government has introduced a free and impartial service called Pension Wise

Transfers from the LGPS to Defined Contribution Schemes

The LGPS isn’t a Defined Contribution Scheme so the new flexibilities don’t apply to it. But there are indirect changes for LGPS members considering transferring to such a scheme. For details – refer to this Q & A for LGPS members.

Additional Voluntary Contributions (AVCs)

The Department for Communities and Local Government (DCLG) are currently considering how the changes will impact on LGPS in-house AVC plans.

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