New pension tax rules explained
Wednesday 4 February 09:56
Information about new tax rules for Jersey pension schemes: Changes came into effect at the beginning of the year and aim to simplify and modernise the tax rules applying to pension schemes and, in particular, allow greater flexibility for pension savers in the payments that they can make.
Flexibility in pension provision
Although pension providers are not obliged to change their schemes, the new tax rules do offer greater flexibility in some areas of pension provision which they can chose to apply. The changes include:
- members of occupational pension schemes are no longer required to make an all-or-nothing decision between remaining in employment and retiring and drawing a pension from the scheme
- pension schemes will be allowed much greater flexibility over how they pay the 30% tax free lump sum
- individuals who can demonstrate that they have “minimum retirement income” will be allowed to access approved drawdown contracts, where they have complete control over when they take payments from their pension fund, even if they have already taken a tax free lump sum
- transfers of funds will be allowed between pension schemes in a broader range of circumstances.
The Taxes Office have produced an explanatory leaflet which summarises the key rules. It will be available at the Taxes Office at Cyril Le Marquand House and made available to pension providers to pass on to their clients.
People with pension savings should contact their pension scheme manager to understand whether the changes will be applied to their particular scheme. The Taxes Office cannot give advice on pension planning.
Senator Alan Maclean, Minster for Treasury and Resources, said “These changes create a modern and flexible framework for such pension schemes in Jersey and give providers the opportunity to be much more flexible in the benefits that they will pay.”
“Pensions are notoriously complicated and we hope that the leaflet and information on the government website will give people an idea of how tax rules are applied to their pension savings. If they then have specific questions about their pension scheme they should contact their pension provider.”
The changes to the tax rules were agreed by the States Assembly during the Budget 2015 debate in September 2014.