Finance Bill: Sipp and SSAS providers can't use scheme pension for MIR
Legislation hidden in the Finance Bill blocks the use of scheme pension to fund the Minimum Income Requirement for the majority of Sipps and SSASs.
A draft statutory instrument published alongside the main Finance Bill disregards payments of scheme pension from qualifying for the MIR for flexible drawdown if it is being paid from a money purchase scheme with less than 20 members.
A J Bell technical marketing manager Gareth James says this rules out the majority of Sipp and SSAS products, including Family Sipps, being used to reach the £20,000 MIR required for flexible drawdown.
He says: “This pushes scheme pension back to defined benefit occupational arrangements, which isn’t typically how scheme pension products have been marketed.
“In terms of the SSAS and Sipp market very, very few scheme pension arrangements will have 20 members or more. As it stands this will rule out the SSAS and Sipp products which have been marketed as offering scheme pension, although I’d expect there to be fairly extensive lobbying to have the rule changed.”
The James Hay Partnership business development director Richard Mattison says: “This means we won’t be able to use scheme pension to meet the MIR, so scheme pension can’t be used in conjunction with flexible drawdown. We’re disappointed but it’s not a surprise.”