If I ever struggle to sleep at night I just think back to the numerous pension seminars I have attended over the years and with in minutes I am out cold. We all agree that pensions are boring but we all need to keep up to date with the latest developments.

With the December’s budget looming you should be aware that substantial changes to pensions, tax relief and benefits are been discussed. The main suggested changes that might come in to force are:

• Tax Free Lump Sum
The government have proposed capping the amount of tax free lump sum you can take at retirement at €200K. This will affect anyone whose fund is more than €800K or where the pay out from your company scheme is in excess of the cap. Don’t lose sleep as it won’t effect most of us.

• Compulsory Pension
A compulsory annuity to give a minimum income of €18,000 is been proposed. This must be taken immediately upon retirement. To buy an annuity of €18,000 may cost you up to €400,000 depend on market conditions at time of retirement. What this means is less options for most people retiring as the majority of people will not build up a fund of over €600,000.

• Tax Relief
Standardisation of tax relief at 33% has also been proposed. This is stated government policy which will have the most impact on pensions. If you are a higher rate tax payer then you will lose out. On the flip side if you are a 20% tax payer then the government are trying to entice you to start a pension. If lower rate tax payers do contribute to a pension then they will benefit greatly from the changes in relief.

• State Pension Age.
The age at which people qualify for the State pension will be increased in phases over the coming years. This will effect both private and public service pensions. Under the new proposal, the age at which people qualify for the State pension will increase over time – to 66 years of age in 2014, 67 in 2021 and 68 in 2028.

It is impossible to predict the outcome or effects to pensions in December’s budget. Pensions have always been and continue to be a time bomb. The gap between public sector pensions and private pension arrangement has grown larger. The public sector feel aggrieved at been hit with pension levies and most private pensions have been decimated with no idea when they will come back to pre-crash levels.

Allan Matthew Cuthbert t/a Financial Wellbeing is regulated by the Central Bank of Ireland to advice on Mortgage,Savings, Life and Pension products