Advisers query pension rules
New pension rules prompt concern ahead of A-day
Advisers have questioned how new rules on ‘alternatively secured pensions’
will work with probate requirements, after last week’s announcement of new rules
for pensions, amended ahead of next week’s A-day.
Under new arrangements pensioners do not have to purchase an annuity at age
75, but can take an ‘alternatively secured pension’.
The move could mean sums of money being left to spouses tax free on an
individual’s death, with concerns that the ASPs could be used to obtain tax
advantages.
The government said last week that any cash left over after the spouse,
having taken possession, dies, will be taxed as part of the first individual’s
estate.
Anne Redston of the Chartered Institute of Taxation queried how such an
arrangement will operate, given the need to close an individual’s tax affairs in
order to obtain probate, and then release the funds to the spouse: ‘How on earth
is this going to work?’ she asked.
The moves are intended to clampdown on those who see the new ASP rules as a
opportunity to avoid taking an annuity at age 75.
An HMRC spokesman said: ‘ASPs are being introduced to
meet the needs of those with religious objections to annuitisation – they are
not intended as a mass-market product.
‘The government is examining how best to restrict ASPs to their original
limited purpose.’