Budget update on pension reforms

The new IOM budget was announced on 20 February, this contained the long awaited and anticipated, reforms on pensions on the island. An overview of these are as follows:

  • Triviality Limit increased from £50,000 to £100,000
  • Remnant Limit in turn increased to match the Triviality limit of £100,000
  • Annual Allowance limit reduced from £300,000 to £50,000, this is a combined for both personal and employer contributions

Introduction of the new rules regarding the Pension Freedom Scheme (PFS)

  • An individual can have a maximum of one plan
  • Income Tax Relief available on contributions into the scheme
  • Minimum access age 55
  • 40% of the new style pension pot can be paid out Tax Free as a one off payment
  • There are no restrictions on withdrawals, however these will be subject to income tax
  • A 10% fee will apply to any transfer from existing Isle of Man pension funds

This now gives people the option and ability to draw a greater amount from their pension fund, all at once or via multiple withdrawals.

What is best for me?
This is the question that many people will now be asking, and the answer to this will depend on your own circumstances, at what stage in the retirement planning process are you? Just starting, part way through, near retirement or in retirement? If you are retired or approaching retirement what are your current, ongoing and future requirements for income?

We at MAC are now in the process of looking at options that will be available when the new rules come into effect on 6 April 2018. If you have any queries or questions please do contact us on 639450 or via email nigel.gregg@macgroup.im