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In an unexpected announcement, the Chancellor confirmed that for those individuals who have already flexibly accessed their money purchase pensions savings, the Money Purchase Annual Allowance (MPAA)will reduce to £4,000 from April 2017.
The MPAA only came into effect in April 2015, when the pension freedoms were first introduced and a restriction was placed on the amount of further pension savings that an individual could make into money purchase (defined contribution) pensions to £10,000.
The Government stated that they do not believe that savers should enjoy the effect of double pension tax relief, such as that when money from pensions is recycled to build up further reserves.
They have today launched a consultation document on the implementation of this measure, which we will review and address over the next few days.
The Government is proposing to tackle pension scams, including the banning of cold calls, as announced by the new Chancellor in this year’s Autumn Statement.
The Government plans to publish a consultation on addressing the options and issues, which is welcomed by the financial services industry as many individuals have been scammed out of their retirement savings by unscrupulous and unregulated firms.
Philip Hammond, the new Chancellor, has announced the launch of a new savings bond to support savers, given the current low level of interest rates.
This is in addition to the new personal savings allowance which was introduced from April this year, in which up to £1,000 of interest can be earned without any deduction of tax. This does not impact the annual ISA allowance which the Government continues to support, with the increase in ISA allowance to £20,000 from April 2017.
National Savings & Investment (NS&I) will offer a brand new 3 year savings bond at a rate of 2.2%, though this is subject to change when the product is launched.
The bond will be available to those aged 16 and over with a minimum investment of £100 and a maximum limit of £3,000 and is due to launch in the Spring of 2017.
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