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| Retirement |
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| Alternatively Secured Pensions confusion Is this valuable tax break under threat? |
| The Treasury has thrown the pensions market into confusion by appearing to threaten the future of a valuable tax break for older people introduced in April this year. Thousands of retired people, particularly company directors with money purchase pensions, have been left in limbo after the Treasury warned that Alternatively Secured Pensions (ASPs) could be restricted only months after they were introduced. Suggestions by Treasury ministers that ASPs were only intended for people with religious objections to annuities, such as members of the Christian Brethren, have outraged consumers and the pensions sector. ASPs were introduced on 6 April this year under the Government’s pensions simplification freedoms. They allow 75-year-olds who opted for an income draw-down plan rather than an annuity when they retired to continue to draw |
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income until they die, removing the long-standing obligation to buy an annuity. But the Treasury is concerned that ASPs may be misused as a vehicle to avoid inheritance tax by being used to pass on remaining pension funds to future generations.
ASPs were seen as part of the solution to falling annuity rates, which were hitting pensioners in the pocket by reducing incomes. They were also seen as a potential method of passing on remaining pension funds to spouses, civil partners and dependants. |
| If you would like to find out more, please email or contact us for further information. Levels and bases of, and reliefs from, taxation are subject to change. Quote source: Financial Times Media 11.08.06 |
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