In his
Budget today, the Chancellor gave a much needed boost to pensioners’ savings
income in a raft of measures that were broadly welcomed.
·
Pensioner
Bonds are to be introduced in January 2015 offering very attractive (in
relation to bank saver rates over the last few years) interest rates of 2.8%
and 4%.
·
Pensioners
are to be given far more freedom in relation to their Defined Contribution
Pension Plans and will no longer be forced to take an annuity but will be able
to take any amount out of their pension pot and, instead of the penal rate of
55%, they will now pay at their individual marginal rate of tax on any
withdrawal. The 25% tax free lump sum facility
is retained.
·
The
10% band of tax which applies, in certain circumstances, on the first £2,880 tranche
of savings income in 2014/15, has been chopped and now effectively becomes a
nil ie 0% rate band.
·
Furthermore
the tranche at 0% has jumped to £5,000 in 2015/16.
·
ISA
limits for everyone have been increased and there will no longer be the
distinction between cash ISAs and Stock & Shares ISAs; the combined ISA
will be known as a New ISA (NISA). The new
annual limit will be £15,000 and these NISAs will be available from I July
2014.
·
Transfers
from existing ISAs can be made into a NISA and any combination of cash, stocks
and shares can be invested, up to the £15,000 annual limit.