Budget 2008 > Individuals > Pensions: technical and administrative improvements
 

Pensions: technical and administrative improvements

A number of relatively minor improvements are to be made to the legislation governing the new tax regime for pensions that became effective on 6 April 2006. Some of these represent further fine-tuning of measures announced in the Pre-Budget Report (PBR).

Rumours of a possible cut in the annual allowance for tax-relievable pension contributions proved to be unfounded.

In summary the measures published today include the following:

• An adjustment to the calculation of the part of a non-registered overseas pension fund that is subject to UK tax rules, to remove an anomaly caused by employer contributions distorting the fraction of the funds that are treated as UK tax-relieved. This measure is relevant to migrant workers resident in the UK who are members of non-registered overseas pension schemes;

• Confirmation of the measures announced in the PBR to prevent tax-relieved pension funds being passed to family members on the death of the scheme member. An adjustment to the draft legislation published at that time will ensure that any IHT nil-rate band not used against the rest of the estate will only be available to offset once against the various IHT charges that could arise on the member’s pension funds;

• Certain payments from UK registered pension schemes that might otherwise be regarded as unauthorised will be treated as authorised. These will include overpayments of pensions, and pensions paid after a member has died;

• Small further changes in addition to those announced at the PBR to relax the complex rules requiring certain pension increases to be tested against an individual’s lifetime allowance;

• Simplification of the administration of lump-sum payments paid in commutation of trivial amounts of pension.