With effect from April next year, pension savers will no longer
be obliged to use their funds to provide an income for life. Luke
Brooks examines the new rules.
The Government currently encourages individuals to make pension
savings through a number of measures, most notably the ability to
claim income tax relief on personal contributions and corporation
tax relief on company contributions. Other advantages include an
exemption from tax on income and capital gains generated within the
fund, tax-free benefits on death before retirement, and a 25%
tax-free lump sum on retirement.
The flexibility for pension funds to borrow up to 50% of their
assets to acquire a commercial property that could be leased to an
entrepreneur's business, and the ability, in certain
circumstances, to invest in private company shares also have
obvious attractions.
