Axa is welcoming the Revenue's proposal for tax simplification of pensions confirmed today in Chancellor Gordon Brown's Budget speech, but warns there could be short term confusion for high earners while they adjust to the incoming new lifetime limit.
It says the delay in implementing the simplification until April 2006 means advisers have more time to deal with the “pressing issues” that will affect high earners in the transitional period, warning that the new restrictions on contributions and the amount that can be accrued by high earners will create short term confusion.
The current lifetime limit is to be lifted to £1.5m in 2006 from £1.4m, and up to £1.8m in 2010.
Axa head of pensions marketing Steve Folkard says: “The new lifetime limit and contribution restrictions which impact high earners create significant opportunities for advisers who have a limited period of time to respond to the complex transitional requirements. April 2006 seems like a long way off, but there is no time to waste in guiding clients through the process of how to protect and ringfence benefits.”