People over 75 in Asps miss out on rule change
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People over 75 who are already in alternatively secured pensions will not benefit from the Budget interim change to push compulsory annuitisation back to 77 or the permanent reforms which come into effect next April.
The Government scrapped compulsory annuitisation at 75 from the day of the emergency Budget. While it is developing new rules, it has allowed people who reached 75 on June 22 or after to hold off buying an annuity for another two years while continuing to face taxes of 35 per cent on death instead of the 82 per cent previously applicable.
But people who were already 75 on Budget day and had chosen already to defer buying an annuity will not benefit from the new arrangement.
A Treasury spokeswoman says: “These people will not benefit from any extra flexibility because they had already made the decision to defer annuity purchase based on a tax charge of 82 per cent. Nothing changes for them.”
AJ Bell marketing director Billy MacKay says: “I understand the Government’s stance but it is still unfair that people in this position simply because of their age will be penalised when if they were two years younger they would have benefited.”
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Readers' comments (2)
Blair Cann | 1 Jul 2010 2:12 pm
As far as I can see not only is this distinction unfair it is completely unacceptable. I find it difficult to think the position will not be reviewed in the fairly near future.The Treasury spokeswoman ( I thought they were all spokespersons now) has failed to rationalise this argument in her comments which suggests to me that this has yet to be thought through (there's a surprise).
At the risk of sounding pedantic can I beg evreyone involved to stop using this phrase "compulsory annuitisation at 75"? It is of course NOT compulsory to buy an annuity at age 75 (nor at 77 with this change either).
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nick white | 1 Jul 2010 4:33 pm
It is ironic that those who have fought hardest for this change in the legislation, i.e. those hitting 75 in the last few years, will not be allowed to benefit from it.
What about the guy who turned 75 the day after reading the pension promises in the Coalition Agreement ? Did he "positively" choose ASP and 82% tax on death as HMRC suggests ? Of course not. He thought "Great, this new Government is actually going to help me out."
HMRC hates losing face and is implementing the will of its new political masters as narrowly as possible.
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