Employment Law Update March 2015
Changes to pension rules
Described as the most radical changes to pensions in almost a century:
As part of the budget, the Chancellor confirmed that pension rules would be changed to provide more flexibility surrounding access to money purchase pension savings.
Who is this likely to affect?
Individuals who have reached the normal minimum pension age (normally 55) who have money purchase pension savings in a registered pension scheme or non-UK pension scheme and beneficiaries of such schemes.
Individuals with drawdown pensions.
Scheme administrators of registered pension schemes or scheme managers of non-UK pension schemes.
What is happening?
Changes are being made to pension tax rules to facilitate greater flexibility in accessing pension savings. It is argued that these measures will make the tax system fairer by ensuring people have more choice when accessing their money purchase pension savings. These new measures will take effect where pensions are accessible after 6 April 2015.
It is proposed that changes will also ensure that anyone who qualifies is not exploited by individuals to gain tax advantages.
There are no immediate changes to tax relief for pension contributions. The annual allowance remains at £40,000 for 2014/15 and 2015/16, although where the taxpayer has started to draw their pension benefits from a money purchase scheme in excess of the tax-free amount, their annual allowance may be reduced to £10,000.
Our advice
Employees must be advised to seek good independent financial advice when considering their pension options. It is important that employers and managers do not attempt to provide advice to their employees.
Other headline budget announcements:
The chancellor announced that the personal tax-free allowance will rise to £10,800 next year – and then to £11,000 the year after.
The national minimum wage will increase by 20p to £6.70 on 1st of October.
The apprenticeship rate will rise by 57p on the same date.
The higher tax rate will also rise from £42,385 this year to £43,300 by 2017/18.
In April national insurance payments for employing under 21s will be abolished.
From April 2016 NI will be abolished for employing a young apprentice.
And outside of the Budget:
Surrogate parents eligible for adoption leave
From 6th April 2015 parents who have a child through surrogacy (who meet the eligibility criteria) will be allowed to take ordinary paternity leave and pay, adoption leave and pay and shared parental leave and pay.
Both parents will also be entitled to take unpaid time off to attend two antenatal appointments with the woman carrying the child.
Our advice
Ensure that your family friendly policies and procedures are continually reviewed and updated to reflect the changes in this developing area of employment law.
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