No meat on the bone

It is pleasing to see that the new Government is at least consulting the industry, but how much they listen will be the crucial issue. There are several opposing forces here. The revenue take position, versus the incentive to save and perceived loss on death and crcuially the simplicitiy of understanding it. Lets hope they do listen and get it right first time. We don't need any more U turns or complications.

Posted by: Martin Tilley

Initial impressions....

Having spead read http://www.hm-treasury.gov.uk/d/consult_age_75_annuity.pdf my initial impressions are favourable.

Posted by: Phil Castle

Worth reading the paper

On page 14 they talk about a minimum income requirement (MIR), before allowing more flexibility to take uncapped income or capital (after suitable tax recovery). If ONS stats say a couple needs £337.70 pw (after housing costs) and state pension for a couple is £156.15 pw, the shortfall of £181.55pw or £9440.06 to provide a joint life annuity (5years age diff between partners) of this level with indexation at RPI per annum, would need an average fund value of £400,002 at age 60 , £335,945.19 at 65 and £223,169.26 at 75. (July Moneyfacts). For those who are single, you’d be looking at £185pw less state £97.65 = £87.35pw £4,542 so male 55 £154,489 60 £127,943 65 £103,935 70 so on, you get the picture. Basically therefore clients need to have a min each of somewhere in the region of £130k EACH at age 65 before they are aloud to move any excess. They need even more if they want to access it sooner, but a lot less if they want to access it later. It seems like a good idea, but can’t see how this addresses the issue of those with trivial pensions as the 1% of lifetime allowance rule means that there end up lots of uneconomic pensions to administer where purchase value was say £20,000. Why not increase the trivial pension limit to 3%, but tax that at 55% too? OK the individual would fall back on means tested benefits once they’d spent their trivial pension, but the govt would have taken 55% of it in tax anyway…..

Posted by: Nameless

Plymouth Brethren

I agree with the Plymouth Brethren - annuities are immoral, profiting from dead people's money...

Posted by: Ken Durkin

Wrong tax rates

As anyone looking at this article will see, the rate of tax on death should be 35% and in ASP currently if not going to a dependent would be lost to charity unless in an individually registered scheme, which is not common. I welcome the changes.

Posted by: Jon Martin