Pensions in Budget 2014

Budget 2014 has been moved forward to October 15 and the Finance Bill is due to be issued 7 days after Budget Day – in or around October 24th. Therefore the drafting of the Bill will have already started. I look at how pensions feature in Budget 2014.

1.  The €60,000 pension cap is likely to be introduced. This is the maximum annual pension that will be allowed.
2. The capitalisation factor of 20 is expected to change in favour of an age related scale. This factor is the multiplier used to calculate the capital value of a pension e.g. a €60,000 per annum pension x 20 equals €1.2m pension pot.
3. The current process for obtaining Personal Fund Threshold’s is likely to change to a self assessment system.
4. Whilst the Act will pass in 2013 there is a hint that the new regime will apply from 1/1/14.

It is also expected that Finance will issue some form of statement that they will cease making any further changes to the pension regime once these new measures are introduced.

It is obviously difficult to advise on rumour, especially with so many changes predicted. For anyone near, or with ambitions to have a fund over €1.2m, now might be a time to start planning company cashflows to see if it is possible to make a contribution before Budget day.