02: Unchanged features
Some key aspects of pensions did not change with the arrival of the simplified tax regime:
- Contributions normally qualify for full tax relief.
- Employer contributions do not attract National Insurance.
- The contributions are invested in a fund that accumulates free of UK tax on investment income and capital gains, although pension funds cannot claim the tax credits on dividends from UK shares.
- Part of the pension fund can be taken as a tax-free lump sum (although the rules have changed), and the rest as a taxable income for life.
- Life assurance can be provided under pension plan rules and the premiums are allowable for tax, although the rules have changed.
