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A place in the scheme of things

As the company that pioneered scheme pensions for individuals within a Sipp, we were interested to read Andy Bell’s view in Money Marketing that it could be made redundant by future changes to alternatively secured pension rules.

He is right that ASP will become more attractive if the penal tax rates on funds left on death were reduced. Relaxing the income restrictions and changing the bizarre rule that those in ASP are always deemed to remain at age 75 are also changes worth fighting for.

We strongly support any measures that give IFAs and their clients more choice and flexibility over income arrangements at this crucial stage of life.

But we live in a world where changes to pension rules can take years to happen and do not always deliver fully the benefits we expect. Many retirees do not have time on their side and are probably wise not to assume even a new government will give such reform sufficient priority.

The big advantage of scheme pension is that it is available right now to help retirees maximise the income they can take from their pensions while retaining control of the fund’s assets.

It fully meets the Government’s stated objective that tax-relieved pension savings be used to provide retirement income. It is also a suffic-iently flexible solution to allow retirees to adapt their income to changing events, whether those are personal, political, economic or legislative.

Most important, while the income available under both USP and ASP remains restricted by reference to GAD rates which include average life expectancy calculations, individuals will never be able to “personalise” the level of income to truly reflect their own personal health and wealth circumstances as they can with scheme pension.

Dave White

Managing director

Hornbuckle Mitchell

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