{"id":18915,"date":"2019-03-14T12:53:44","date_gmt":"2019-03-14T12:53:44","guid":{"rendered":"https:\/\/smh.group\/?p=18915"},"modified":"2023-02-15T13:50:31","modified_gmt":"2023-02-15T13:50:31","slug":"old-case-throws-up-pension-protection-risk","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/","title":{"rendered":"Old case throws up pension protection risk"},"content":{"rendered":"

A European Court decision from 1990 is suddenly raising questions about a key element of pension taxation. <\/strong><\/h3>\n

On 17 May 1990, the European Court of Justice decided that gender equality should be applied to non-state pensions. The case, Barber v GRE, prompted a major overhaul in UK pension provisions. At the time most pension schemes had different pension ages for their male and female members, echoing the 65\/60 differential that applied to state pensions.<\/p>\n

The Court\u2019s judgement posed a particular problem for schemes that contracted out of SERPS<\/strong>, the old state earnings-related pension scheme. To contract out, the private scheme had to offer at least a guaranteed minimum pension (GMP) that, broadly speaking, matched what SERPS would have provided. This posed a classic Catch-22: the GMPs were unequal because SERPS was based on state retirement ages, but Barber said pensions had to be equal.<\/p>\n

A problematic compromise<\/strong><\/h3>\n

The fudged solution was to equalise total pension benefits. But this didn\u2019t fully resolve the problem as pre- and post-retirement escalation rates were not the same for the GMP and non-GMP portions. As might be expected, the matter ended up in the courts and last year \u2013 28 years after the Barber decision \u2013 the UK High Court ruled that GMP benefits had to be equalised. Equalisation will mean that some people will see their pension benefits increased, although the amounts will generally be small.<\/p>\n

Cue a new problem, which has just emerged: if you have fixed protection (2012, 2014 or 2016) for your lifetime allowance, any benefit increase outside the normal inflationary adjustments means that the protection is lost. In extremis, for somebody with fixed protection 2012, a small GMP equalisation adjustment could cut their lifetime allowance from \u00a31.8m to \u00a31.03m (\u00a31.055m from 6 April 2019). The newly unprotected sum would then potentially be subject to a tax rate of up to 55%.<\/p>\n

HMRC is aware of the problem but has not acted so far. The situation serves as a reminder that if you benefit from one or more of the various forms of pension protection, their loss can be highly expensive and that great care is needed with any pension changes, even involuntary ones…<\/p>\n

To discuss your pension requirements<\/strong><\/span><\/a> please contact one of our financial advisers on 0114 266 4432<\/strong> or info@smhca.co.uk<\/strong><\/span><\/a>.<\/p>\n

The value of tax reliefs depends on your individual circumstances.<\/h6>\n
Tax laws can change.<\/h6>\n
The Financial Conduct Authority does not regulate tax advice.<\/h6>\n","protected":false},"excerpt":{"rendered":"

A European Court decision from 1990 is suddenly raising questions about a key element of pension taxation.<\/p>\n","protected":false},"author":4,"featured_media":18158,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[246,24,247],"class_list":["post-18915","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-pension-protection","tag-pensions","tag-retirement-planning"],"acf":[],"yoast_head":"\nOld case throws up pension protection risk - SMH Group<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Old case throws up pension protection risk - SMH Group\" \/>\n<meta property=\"og:description\" content=\"A European Court decision from 1990 is suddenly raising questions about a key element of pension taxation.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/\" \/>\n<meta property=\"og:site_name\" content=\"SMH Group\" \/>\n<meta property=\"article:published_time\" content=\"2019-03-14T12:53:44+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-02-15T13:50:31+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2018\/11\/Extracting-Development-FI.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"585\" \/>\n\t<meta property=\"og:image:height\" content=\"250\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Brendan Hall\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Brendan Hall\" \/>\n\t<meta name=\"twitter:label2\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/\"},\"author\":{\"name\":\"Brendan Hall\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/637129b7464f960037f1b676f625570e\"},\"headline\":\"Old case throws up pension protection risk\",\"datePublished\":\"2019-03-14T12:53:44+00:00\",\"dateModified\":\"2023-02-15T13:50:31+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/\"},\"wordCount\":399,\"image\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2018\/11\/Extracting-Development-FI.jpg\",\"keywords\":[\"pension protection\",\"Pensions\",\"retirement planning\"],\"articleSection\":[\"SMH Financial Services\"],\"inLanguage\":\"en-GB\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/\",\"url\":\"https:\/\/devstagesite.co.uk\/smhgroup\/old-case-throws-up-pension-protection-risk\/\",\"name\":\"Old case throws up pension protection risk - 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