High net worth individuals could benefit from new pension rules which came in to force on 6 April 2006 (“A-Day”), permitting them to fund their retirement within years rather than decades.
Individuals on six-figure salaries had previously been hamstrung by regulations which limited contributions to workplace pensions to just 15 per cent of earnings. Personal pension contributions were also limited to between 17.5 per cent and 40 per cent of earnings, depending on age.
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Since the 6 April this year, the annual contribution cap has been increased to £215,000 per year and could benefit those who want to accelerate the rate of their retirement savings. An individual paying the maximum of £215,000 into their pension for two or three years could almost reach their lifetime limit [currently £1.5m] in a few years.
A 40 per cent taxpayer investing £129,000 would receive tax relief at 40 per cent producing an overall investment of £215,000. |
