Retiring before 6 April 2023
If you’re planning to retire before 6 April 2023 but the government’s announcement might affect that decision, you may want to speak with the pension contact at your workplace by 31 March 2023 – sooner if possible.
Voluntary Salary Cap
If you already have a Voluntary Salary Cap or have chosen to have one from April 2023, you can cancel or amend it by the new deadline of 6 April 2023. If you miss this deadline, your Voluntary Salary Cap will remain in place until the end of the 2023/24 tax year.
To change or cancel a Voluntary Salary Cap, you must tell the pension contact at your workplace before the 6 April deadline.
Enhanced Opt Out
If you’ve taken Enhanced Opt Out, you’re able to cancel it but please be aware of the following:
- Cancelling an Enhanced Opt Out made in the last 12 months will effectively reverse your original election, so you’ll be treated as though you had been building up benefits in the normal way throughout. You will also likely be required to pay contributions for that period and it may have other impacts too, so you should speak to the pension contact at your workplace if you are considering doing this.
- If you chose Enhanced Opt Out more than 12 months ago, you cannot pre-date the option to restart building USS benefits.
- If you’ve chosen Enhanced Opt Out in the past, and chose to restart building USS benefits, you’re not able to make a further Enhanced Opt Out election in the future.
- There’s no deadline, if you want to cancel your Enhance Opt Out.
- If you want to cancel an Enhanced Opt Out, please give the pension contact at your workplace written notification, so they can arrange for it to be processed in the next available payroll run.
At a glance summary of pension tax changes announced in the Spring Budget
- The Lifetime Allowance (LTA) tax charge will be removed from 6 April 2023, and the LTA itself will be abolished in the future.
- The Annual Allowance (AA) will go up to £60,000 from £40,000, from 6 April 2023 (you’ll still be able to carry forward unused AA from the previous three tax years).
- The Money Purchase Annual Allowance (MPAA) will go up to £10,000, from £4,000 from 6 April 2023.
- The Tapered Annual Allowance will go up to £10,000, from £4,000 from 6 April 2023.
- The adjusted Income threshold for the Tapered Annual Allowance will go up to £260,000, from £240,000 to from 6 April 2023.
- The maximum tax-free cash for anyone without HMRC protections will be frozen at £268,275.
Guidance and financial advice
It’s important that any choices you make are right for your circumstances, so we recommend that you seek independent financial advice from an expert before committing to any decisions regarding your pension.
Visit our guidance and financial advice page, to find a range of resources, including information on how to access an independent financial adviser.