Hornbuckle Mitchell wants ASP confirmation

Hornbuckle Mitchell (HB) has called on the Government to confirm it has formally dropped its tough stance on the use of an ASP at age 75.

Currently, the Government's official stance is that an Alternatively Secured Pension should only be used to defer the purchase of an annuity when the client had a 'principled religious objection' to buying a lifetime annuity.

However, HB has said that the Government appears to have executed a dramatic U-turn by suggesting any pension saver who wants to delay annuity purchase past age 75 - giving a chance for their pension funds to recover from recent financial market turmoil - is free to move their funds into ASP.

Mary Stewart, marketing director at HB, said: "Although there were no restrictions on who put funds into ASP written into the rules, the Government said it was only for those with religious objections to pooling risk."

She added that the then economic secretary to the Treasury, Ed Balls, had told Parliament in 2006 that it was always the intention that the rules would only apply in the specific and very narrow case of individuals with such principled religious objections, such as the Christian Brethren.

"He made it very clear that for non-believers to use ASP would be seen as an abuse of the tax breaks on offer from a pension, and threatened to withdraw ASP altogether if it became a way for people to avoid annuitising at age 75," she said.

However, Stewart argued that the financial crisis of this year appears to have caused the Department of Work and Pensions to drop the religious restriction and that ASP is now available for anyone nearing age 75. She also believes that the Government is instead using ASP for political purposes, primarily as a reason not to implement the Conservative's proposal to suspend the age 75 rule altogether.

"A suspension which allowed people to remain in unsecured pension post 75 would be a far simpler solution," she said.

"The Government should make it a priority to reassure clients and advisers by making it clear it does not view ASP as a 'loophole', but an option freely available to everyone who feels it is the best solution to their needs."

To comment, contact Simon Danaher on 0207 034 2680 or email: simon.danaher@incisivemedia.com

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