IFAs still back ASPs despite new charges

FOUR out of five IFAs still intend to recommend Alternatively Secured Pensions (ASPs) despite the proposed new charges announced in the pre-budget report, according to research commissioned by Skandia.

Skandia spoke to more than 600 advisers with 78pc of respondents saying they still liked APSs. However, over two thirds (70pc) said they will only recommend them to a few appropriate clients with 8pc saying they will recommend them to all clients.

Billy Mackay, head of marketing at Skandia Life, said: “The research shows that financial advisers still see a market for ASPs and the government has a great opportunity to utilise this to encourage pension savings in the UK.

“We understand that the government does not want to see tax efficient pension funds passed on to beneficiaries without an appropriate tax charge but its current proposal is overly punitive.

“The pre-budget report clearly knocked public confidence. A total of 77pc of the advisers we spoke to said the pre-budget announcement on ASPs reduced their clients’ confidence in pensions.

"The government has an opportunity to turn this sentiment around in the forthcoming budget and we hope that it has listened to industry proposals that are realistic and workable.”

Skandia believes the Government has made it clear its support of annuities is driven, in part, by an aversion to tax-efficient pension funds being inherited by beneficiaries.

However, Skandia said that whilst it “fully understands this stance”, it believes the key factor is to agree on an appropriate neutralising tax charge on ASP funds that brings them in line with annuities.

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