Pension scams – stay vigilant
Cyber-crime is a growing threat in the UK and throughout the world. We encourage you to stay alert against any suspicious calls, texts or emails which could be a scam. If you do receive any suspicious messages or calls, please do not hand over any information such as your bank account details. Instead, hang up, or delete any worrying texts or emails. The FCA has some useful information on how to spot the warning signs of financial scams at www.fca.org.uk/consumers/protect-yourself-scams
Cyber criminals commonly use a scam technique called “phishing”, which is mostly email-based but can also be via telephone calls, to lure victims under false pretences to websites which look legitimate to get them to provide information including bank account and credit card details. These emails/phone calls appear to be from recognisable sources such as banks but actually link to fraudulent websites. Accordingly, we have the following guidance to help reduce the risk of falling foul of these phishing attempts:
- Protect your email with a strong password (tip: use 3 random words to create a single password that’s difficult to crack).
- Do not share your password with anyone.
- Install the latest security updates to your browser software and personal computing devices.
- If in doubt, do not open emails from senders you do not recognise.
- Check links look correct before you click on them.
- Be suspicious of anyone who asks for your bank account or credit card details.
- If the email contains spelling mistakes, this can be a sign that this is a phishing scam. Do not open the email or attachments.
- If you think you have been a victim of fraud you should report it to Action Fraud, the UK's national fraud and internet crime reporting centre, on 0300 123 2040.
State Pension Age
The State Pension Age (SPA) is the earliest age at which someone can start receiving their State Pension. The SPA for women increased from 60 to 65 between 2010 and 2018, bringing it in line with the SPA for men. Then for both women and men, the SPA increased from age 65 to 66 between 2018 and 2020. It is due to increase to 67 by 2028, and eventually increase to 68.
You can check your State Pension Age at www.gov.uk/state-pension-age
If you are coming up to retirement in the next few years, you can check the amount of your State Pension by getting a forecast from www.gov.uk/check-state-pension
Alternatively, you can phone 0345 300 0168.
Pension tax changes
In the 2023 budget, the Chancellor announced plans to make the following changes to pension tax allowances.
The Annual Allowance - The Annual Allowance is the maximum amount of money you can save in pension benefits each year without incurring a tax charge. This amount has remained at £40,000 since 6 April 2016. The Chancellor announced this cap would be rising from £40,000 to £60,000 from 6 April 2023.
The Tapered Annual Allowance - The Tapered Annual Allowance is the point at which the Annual Allowance is reduced for high-income individuals whose threshold income is above £200,000. If you are impacted by this, the government has more information at www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance
Money Purchase Annual Allowance - When you start drawing money from a defined contribution pension (except if you buy an annuity), the amount you can pay into any defined contribution pensions without paying a tax charge is limited by the Money Purchase Annual Allowance. The Money Purchase Annual Allowance increased from £4,000 to £10,000 from 6 April 2023.
The Lifetime Allowance - The Lifetime Allowance is the maximum amount an individual can take from all their registered pension schemes without incurring additional tax charges. This does not include the State Pension. The Lifetime Allowance for the 2022/23 tax year was £1,073,100. The budget removed these additional tax charges for amounts exceeding the Lifetime Allowance for the 2023/24 tax year, and the Lifetime Allowance is due to be abolished completely from 6 April 2024.
Cash at retirement - When you start drawing money from your pension account you can choose to receive a tax-free lump sum payment of up to 25% of your pension or Lifetime Allowance (whichever is lower). The maximum amount you can claim tax free is currently £268,275. The maximum amount will be frozen at £268,275, even though the Lifetime Allowance is being removed. If you have existing protections from the Lifetime Allowance and were entitled to a higher tax-free lump sum on 5 April 2023 you will continue to be entitled to this higher sum.
For more information on pensions legislation and taxation, take a look at the pensions page of the government website www.gov.uk/browse/working/workplace-personal-pensions
If you’re not sure how these changes will affect you or want more information about the budget, the government’s MoneyHelper website has a useful article and contact details for further help. www.moneyhelper.org.uk/en/blog/everyday-money/what-the-2023-spring-budget-means-for-you
Pensions Dashboards
In the last Spotlight we told you about the Government’s plan to set up an online service which will allow people to see information from multiple pensions, all in one place: Pensions Dashboards. Since then, phase 1 and 2 of the development have been completed, which means they are now in phase 3. Phase 3 involves connecting volunteer pension schemes and providers to the service, using real data. They will then complete ongoing testing before moving to phase 4.
What to expect in phase 4 and 5
Phase 4 – Connection and dashboards available point
In this phase, schemes and providers will begin to connect to the Pensions Dashboards ecosystem.
Phase 5 – Transition to business as usual
This phase assumes a high level of coverage, meaning that the service can be transitioned into an ongoing delivery and maintenance arrangement.
It’s important that you always keep your personal details up to date so that once the Pensions Dashboard is launched, your records can easily be matched and you see the most accurate information.
As you are a DCL Section member, please contact the Aon administration team at DCLPensions@aon.com
To find out more about the launch of Pensions Dashboards visit www.pensionsdashboardsprogramme.org.uk