Author: siteadmin

The Chancellor of the Exchequer, Jeremy Hunt, spelled out his Spring Budget plans on 15 March 2023. Please find below a summary of the key changes to the pensions taxation which may be of interest to you as a member of the Baxi Group Pension Scheme.

Annual allowance

For defined contribution (DC) members, there is a limit on the total amount of pension contributions that can be paid by you and your employer each tax year before a tax charge might apply, known as the Annual Allowance.

For defined benefit (DB) members, the Annual Allowance limits the total amount of pension that you can build up over the tax year before a tax charge may apply.

In the 2023 budget, it was announced that the standard annual allowance would be increasing to £60,000 (from £40,000) for the tax year 2023/24.

For very high earners, the Annual Allowance reduces as your income increases and this is called the Tapered Annual Allowance.

If you have adjusted income* of over £260,000 per year in the 2023/24 tax year, you may be impacted by the Tapered Annual Allowance.  This tapers the annual allowance down to £10,000 per year (previously £4,000) for those with an adjusted income of £360,000 or more.

Please note, the adjusted income threshold has changed from £240,000 in the 2022/23 tax year, as announced in the 2023 Budget.

*Adjusted income is your annual income – broadly all income that you are taxed on including dividends, savings interest and rental income – before tax plus your pension savings over the year.  For a DC member, your pension savings will be based on the value of your own and any employer pension contributions.  For a DB member, it will be calculated by reference to the increase in the value of your pension over the year.

 Lifetime Allowance

The Lifetime Allowance limits the total amount you can build up in pension benefits over your lifetime while still enjoying the full tax benefits.  If your total benefits exceed the lifetime allowance, a tax charge called the lifetime allowance charge applies.

In the 2023 budget, the government announced that the lifetime allowance charge will cease to apply from 6 April 2023 onwards.  The lifetime allowance itself will be abolished completely in future legislation, with effect from 6 April 2024.

Whilst this is good news for pension savers with large benefits, you should be aware that the position may change in the future.  This is because the Labour Party has said that it will reinstate the lifetime allowance and the lifetime allowance tax charge, if it gets into power at the next election.

Maximum tax free cash

In addition, the government announced that the maximum amount of tax free cash an individual can take at retirement will be permanently capped at £268,275 (25% of the Lifetime Allowance for 2022/23) unless the individual has a protected right to a higher amount.

Some individuals may have some protections including a higher protected amount of tax free cash. It is not yet clear what conditions, if any, might be attached to retaining these protections so individuals with such protections should take advice before making any changes to their pension saving.

 Money Purchase Annual Allowance (MPAA)

The MPAA applies if you have flexibly accessed part or all of your pension savings from defined contribution arrangements. You can find out more about the MPAA at: Money Helper – MPAA.

If you are subject to the MPAA, from the 2023/24 tax year, you will be able to pay up to £10,000 (previously £4,000 in the 2022/23 tax year) of contributions into your DC pension savings each tax year and you will receive full tax relief on it. This amount includes contributions made by your employer. If you go over this amount, you will be personally responsible for paying the tax due on any additional contributions.

This announcement summarises the headline changes, but some details have yet to be published.  The tax changes may also affect different individuals in different ways. Please note that pensions taxation allowances have been changed in the past and may be changed again in the future. We cannot advise you on the best course of action for your particular circumstances.  We strongly recommend that you get financial advice before making any changes to your pension. You can visit Money Helper (previously the Money Advice Service) to source your own financial adviser if you don’t already have one.

Please contact Buck, the Scheme Administrator, if you have any questions.  Their contact details are 0330 123 9581 and baxipensions@buck.com.

Dear Members,

We are experiencing a rise in cost of living, and investment markets have been particularly volatile during 2022. The Trustee recognises that you may be concerned about what this means for you and your pension savings.

The Trustee continues to monitor markets closely with our investment managers and expert advisors, with the Russia-Ukraine crisis, rising energy prices, rising inflation and increases in interest rates leading to significant levels of disruption in markets. This means you may have seen the value of your savings move up and down by more than in previous years. For most members, pensions are a long-term investment and investments in the default investment strategy (the BGPS Drawdown Lifestyle) are still expected to provide good returns over the long-term. The default investment strategy is also designed to reduce your exposure to market volatility as you near retirement. Therefore, for most members, leaving your pension savings invested for the long-term is likely to be a good approach.

However, the Trustee cannot know what is right for you on an individual basis. You may wish to speak to an independent financial advisor before making any important decisions. You can find one in your area at www.unbiased.co.uk.

In the meantime, please take the time to review where you are invested, and let us know when you are planning to retire. You can do so on the Pension Portal atwww.mybaxipension.co.uk. You can find more general information about the Baxi Group Pension Scheme by exploring the other tabs of this website. If you have any questions, please speak to the Scheme Administrator by emailing baxipensions@buck.com or by calling 0330 123 9581.

The Trustee will continue to monitor investment markets and progress towards members’ long-term goals closely.

Best wishes,

The Trustee of the Baxi Group Pension Scheme

Following the spread of the Coronavirus and the recent volatility in financial markets, as a member of the Baxi Group Pension Scheme , you may have questions about what it means for your future benefits.

It’s a well-known fact that stock markets do not like uncertainty and at present the scale and pace of the Coronavirus has played right into that space.

As the virus has spread, stock markets have fallen significantly over recent weeks, but this is on the back of really strong performance throughout 2019. Yes, there is uncertainty about where things will go from here – as we say, markets don’t like uncertainty – and this could continue for some time. However, it’s important to remember that pensions saving is for the long-term and that most members of the Scheme invest their pensions savings in the default strategy which is designed to gradually lower the amount of investment risk as members approach retirement.

We think that it’s worth bearing in mind these points, depending on which part of your savings journey you are in;

• If your retirement is not imminent then you still have time for markets to recover. In general, there may be plenty more bumps along the way, but it’s good to know that whenever there is a market dip then the positive side is that you can potentially gain in the future because your regular contributions will be invested into markets cheaply.
• If you are approaching retirement in the next few years and you are invested in the default strategy (like the majority of members) then your savings are in lower risk assets compared to those members in their early years of saving. This is designed to insulate savings from market movements and it is expected that volatility of asset value will be more muted.
• If your retirement is imminent (e.g. in the coming weeks or months) it is important to remember that any loss from a fall in the value of your investments is only incurred if benefits are crystallised. This means that decisions on switching, transferring and retiring should be taken carefully in times of significant market volatility like this.
• The Trustees of the Scheme, along with its advisors will continue to monitor developments.

Please note that the update above provides a general update and does not constitute financial advice. The Trustee cannot know what is right for you on an individual basis. Neither the Company, the Trustee or their advisors can provide you with individual financial advice on which fund(s) to invest in. The Trustee recommends that you consider speaking to a financial adviser to help you make any decisions regarding your pension arrangements. You will be charged a fee for this service. If you don’t have a financial adviser you can find one in your area at  www.unbiased.co.uk.

In May of last year, the European Union altered the digital landscape dramatically by enforcing its General Data Protection Regulation (GDPR). This is the most important piece of data privacy regulation that’s been created in twenty years, and it will fundamentally change the way data is handled in every sector. Pensions are no different!

In practical terms, this makes the way we process and store your data more difficult, and it requires various notifications from us, and opt-ins-or-outs from you. A privacy notice was sent out with our last newsletter, and you can refer to it if you need a refresh on the details.

The Trustees take privacy very seriously. Companies not only have a moral obligation to let individuals control their own data, but there are serious security and regulatory issues that must be remembered when it comes to how we deal with data. Companies that are found to be in breach of GDPR can have heavy fines imposed upon them.

If you have any questions about data and privacy that aren’t answered by the privacy note above or on this website, you should feel free to contact us through the contact form on this website.

The Baxi Pensions Trustees have decided to partner with Hargreaves Lansdown to provide retirement support to members! This decision wasn’t taken lightly, and is recognition of how vitally important it is that everyone understands – and gets to make the best of – their pension opportunities while they still have the chance to do so.

Hargreaves Lansdown describes itself as “the UK’s number 1 ‘investment supermarket’ for private investors”. It aims “to help you make more of your investments by giving you the tools and information to make your own informed decision.” Baxi Pensions is proud to bring you Hargreaves Lansdown’s financial acumen, and empower you to make the best pension decisions possible!
Of course, the ultimate goal of this partnership is to help members make good choices at retirement age. But it is never too early to start thinking about your pension and eventual retirement – wherever you are in your working life. As a result, we hope all of you will make the most of this meeting of minds, and use it to your advantage.

Keep an eye out over 2019 for news about webinars, seminars, and a whole host of other communications that will give you more information. And, if you’re approaching retirement age, keep an eye out for your Passport to Retirement, too – a document that will help you ensure you’ve done everything you should before the end of your working life.
Until then, some final words of wisdom from Hargreaves Lansdown: “Nobody is as committed to your financial future as you,” – together, we’ll help you make the most of it!

Pension scams and cold calling are on the rise – again – and it’s vitally important that you protect your retirement fund by watching out for them.

On the 9^th of January this year, the government banned cold calling. So if you do receive a ‘cold call’ about your pension, it could be that it’s a scam – what you need to do is make sure the caller is legitimate.

However, modern scammers don’t just rely on the telephone. Michelle Cracknell, the chief executive of The Pension Advisory Service, has gone on record as saying that there is “increasing evidence” that people are being contacted via social media and through existing working relationships. Cracknell says these schemes will never be fully stamped out: “The pickings are too rich.”

How can you protect yourself? First of all, never believe anyone who says they can help you to access your pension before the age of 55. And second, always make sure the company you are dealing with is legitimate – particularly if you plan to give them any money!

The potential damages you could incur if a scammer takes advantage of you are huge – for most of us, our pension represents the biggest saving and investment we’ll ever undertake.

The best way to stay protected is to exercise common sense (if it’s too good to be true, it probably is!) and to get impartial advice from a trusted source. You can learn more about scams, by visiting the website of the Pensions Regulator: https://www.thepensionsregulator.gov.uk/en/pension-scams

And remember, if you’re in any doubt – don’t hand over anything: time, money, or information!

If you’ve kept up-to-date with previous communications, you’ll already know that the decision was made to change investment manager.

The Trustees of Baxi Pensions have a duty to ensure that the investment funds that are available to you provide good value for money and acceptable returns – and late last year, they determined Columbia Threadneedle no longer fulfilled those requirements.

After a detailed selection exercise they found an investment manager that met the Trustees’ objectives and fit members’ best interests – Legal & General Investment Management (LGIM) – and now, the transition is complete. Your pension funds are now active on LGIM’s investment platform.

LGIM is one of Europe’s largest asset managers, and a major player in the investment world globally. As a result, you can be assured that the company will provide you with a much greater variety of funds than you previously had access to. You can learn more about these options in the Investment Guide.

You won’t just benefit from more investment options, either. Members of the Baxi Group Pension Scheme will also see lower charges than under the previous arrangement (meaning more of your pension pot ends up in your hands) and greater long-term security. For all the details, check out Changes in Depth.

The Trustees will continue to monitor investment performance closely.