Budget: 23 March 2011

All tax bands, rates and benefit levels used in Dynamic Planner will be automatically updated as part of our Budget release overnight on 5^th/ 6^th April.

This will affect the planning modules, including Cashflow and Protection Needs Analysis (as a result of the changes to Incapacity Benefit).

A number of other changes were also announced in the Budget Speech. These included further significant restructuring of state pensions, adjustments to inheritance tax rules with new allowances amongst other rules. We will be thoroughly reviewing these changes and we will circulate an impact assessment in due course. This will include a plan outlining any further development that will be required.

Click on the image to download our Budget summary pdf

Pension legislation changes

The Pensions Bill 2011 takes effect from 6^th April and removes the compulsory requirement to take an annuity by age 75. As a result, the following will change as part of this year’s Budget release:

• Removal of compulsory annuity – advisers can now select a new box ‘not taking an annuity’ and the option still remains to take one (max age 99)
• Flexible drawdown
• Advisers will be able to select a percentage (in 1% increments) or a specific amount. A warning note will appear to ask for the adviser to confirm that the client meets the £20k ‘minimum income in retirement’ test.
• Drawdown calculations have also been updated to fall in line with the review schedule (every three years to age 75 and annually thereafter)
• The annual and lifetime allowances will reflect the new limits. The ‘Scheme joining date’ is now part of the basic details and a new annual allowance screen will be introduced to capture any unused allowance for the previous three years. Dynamic Planner will then use the current contribution level, rate of increase and joining date to estimate the previous contributions. This can then be overridden with exact figures, and this will enable the contribution in any year to be edited.
• The option to contract out only applies to 2011/12 and we have amended the data captured for forecasting purposes

These changes will affect the following modules: At Retirement, Retirement Planning, Pensions Switching and Estate Planning.