Pension changes - "buy while stocks last?"

There will be significant changes to the rules on pension schemes starting from 6 April 2001. The new "stakeholder pensions" are intended to be simpler and cheaper than the "old" personal pension scheme arrangements, but some of the rules on payment of contributions will be more restrictive.

Whenever there is a change of this sort, many people are rushed into buying the old product before the rules change, convinced that the new product must be less good. Few people believe that the Chancellor would introduce something that was actually better than before! This may be so, but it may not - it will depend on your circumstances. It will be important to take advice on making the most of pension relief leading up to the change of the rules.

Because it is possible to "carry back" pension premiums from a later tax year to an earlier one, it will still be possible to use "the old rules" for a pension premium paid up to 31 January 2002. As always, planning which is done at the very last minute is more likely to go awry - so it may be better to take a little time and use the carry-back rules, rather than rushing to pay extra premiums before 5 April.

Actionpoint

REVIEW PENSION PLANS AND DON'T RUSH IN

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