After all the hype, A-Day arrived on 6th April, heralding the start of the so called pensions simplification regime. High earners unaware of the new rules may fall into tax traps whilst others may miss out on new opportunities. The simplification was designed to take 8 different types of complicated pension arrangements and merge them into one system with the same limits and rules. Here's a summary of some key points of the new regime:

• Annual contributions - everyone can contribute up 100% of their earnings up to £215,000 a year to a pension, rising to £255,000 by April 2010. This allows you to put larger amounts in one year and less another as your earnings fluctuate.
  
  
• Lifetime allowance - your pension pot when you retire cannot exceed £1.5 million (rising to £1.8 million by 2010). If you exceed this there are tax penalties as high as 55%! High earners should investigate Primary Protection and Enhanced Protection.
  
  
• Trivial Pensions - if your pension fund is worth less than £15,000 when you are over the age of 60 you can take the entire fund as a lump sum so long as your scheme rules allow it. A quarter of this will be tax free. The £15000 limit is the combined value of all your pension funds.
  
  
• More Pensions - you can now take out as many pensions as you like. So for example. employees in an occupational scheme can now also start a Self Invested Personal Pension (SIPP) that allows you to choose how your fund is invested.
  
  
• Retirement age - these will rise from 50 to 55 by 2010, so that after 2010 you won't be able to draw a pension until you are 55.
  
  
• Tax-free lump sum - a quarter of the pension fund can now be taken tax free for all pensions.
  
  
• Pension Incomes - you can purchase an annuity and those taking an annuity will be allowed to pass some of their pension income to their heirs if they die before age 75. The rules forcing those with personal pensions to buy an annuity by the time they are 75 will be scrapped and they will be able to take an Alternatively Secured Pension instead allowing them to take an income directly from the pension savings whilst still leaving the pension fund invested. However, you'll only be able to draw a maximum of 70% of the income you could of got from an annuity. A tax-free cash sum up to the lifetime allowance can be paid in the event of your premature death before retirement benefits have come into payment.
  
  
• Cheaper insurance - you can get cheaper life assurance by combining it with your pension. This effectively allows you to get tax relief at your marginal rate on the premiums. The amount of cover you have counts towards the £1.5 million lifetime limit.

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