April changes and your retirement savings

The new tax year sees the introduction of several changes that may affect your retirement savings.

We’ve summarised the key ones that take effect in April 2017:

• Employees on our UK payroll, including temporary staff, who earn over £10,000 a year (and meet the other eligibility criteria) will be automatically enrolled. The earnings trigger remains unchanged from last year.
• The qualifying earnings band, for calculating contributions, will increase to £5,876 for the lower limit and £45,000 for the upper limit in this new tax year.
• Early exit fees from DC pensions will be capped at 1% and similar rules for occupational pension schemes that contain flexible benefits are expected to apply from October 2017. L&G do not charge any exit fees to members, so if you’re in the AHBRSP and AE Scheme you will not be affected – read more here.
• You’ll be able to withdraw up to £1,500 (tax free) from your pension pot in order to pay for financial advice relating to your retirement – read more here.
• If you take your DC pension savings flexibly, your Money Purchase Annual Allowance (MPAA) could reduce to £4,000 – read more here.
  

Other changes that take effect include:

• Lifetime ISAs open for business – if you’re under 40, these are a way of saving for a deposit on your first home or to provide retirement income. You can contribute up to £4,000 in each tax year and the Government will add a 25% bonus to your savings, up to a maximum of £1,000 – read more here.
  
• 4% increase in the National Living Wage, for people aged 25+, from £7.20 to £7.50/hr.
• 1.4% increase in the National Minimum Wage, for those aged 21 to 24, to £7.05/hr.