Investment Life & Pensions SIPPS Supplement June 2014 | Page 11

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SIPPs and the
Budget

Beyond the headlines
Nigel Bennett considers the implications for SIPPs from
the 2014 Budget and how clients can make the most of
the changes
On 19 March 2014, the Chancellor George
Osborne announced proposals for major
pension reform - the most radical change
since A-day. It is worth looking at the
potential implications for SIPPs and
highlighting some of the planning
opportunities that arise.
The headlines
• From April 2015, it will be possible for
members of money purchase pension
schemes on reaching age 55 to withdraw
their entire pension fund as a lump sum.

• There is a consultation period under way in
respect of other aspects, the results are
likely to be made public in September.
Included within the consultation is how the
“guidance guarantee” can be delivered (the
Chancellor promised that everyone retiring
with a pension pot would be able to receive
free face-to-face guidance on their
retirement options - although he
accidentally used the word “advice” which
has caused a stir) and whether the tax rate
for lump sums paid on death should be
reduced from the current rate of 55%.

• These changes require amendment to
primary legislation but in the interim, from
27 March 2014, certain limits have been
increased: the triviality limit has increased to
£30,000; the minimum income requirement
for flexible drawdown has reduced to
£12,000; and capped drawdown limits
increased by a quarter from 120% to 150%.
This means that for some, increased
access is already here.

Our view as a SIPP provider
The changes outlined are a mixture of interim
measures and proposals for what might
happen next year. Initially, our view was that
the proposals for income flexibility were
probably “too good” and that they would be
significantly reined back in when the final
rules are published. However, the proposals
have received such positive reaction and
cross-party support that it now seems likely

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