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Asp axe may mean end for forced annuities

Bee believes court challenge would follow abolition

Pension guru Steve Bee says scrapping alternatively secured pensions could be a blessing in disguise as it could bring about the end of forced annuitisation.

Scottish Life head of pensions strategy Bee said if the Government follows through with threats to scrap Asps, this will inevitably lead to a challenge at the European Court of Human Rights as forced annuitisation at 75 will breach incoming European anti-age discrimination rules.

He said Asps were only introduced in the first place to enable the Government to circumvent the new laws.

He said: “Someone who is forced to annuitise at 75 will ask why they are being picked on and challenge this in the European courts. Then we will end up with something better than Asps – an end to the existing arbitrary rules.”

But Aegon head of pensions development Rachel Vahey, who revealed that Aegon Scottish Equitable has only completed 61 Asps, said: “I cannot see how Asps could be scrapped as this would be religious discrimination.”

Some of the panellists said they were encouraged by increased levels of contributions from high-net-worth clients into pension funds since A-Day.

Bee said: “Lots of higher-rate taxpayers recognise that higher-rate tax relief may not last so are getting in as much contribution as possible now.”

But Worldwide Financial Planning IFA Nick McBreen argued that the creation of a lifestyle allowance has created less urgency to save.

St James Place head of pensions Ian Price said the Chancellor’s controversial U-turn on residential property in Sipps was the best thing to happen to pensions as it encouraged people to invest in pensions rather than esoteric assets.

But Bee said: “Residential property in Sipps would have enabled people in retirement to invest in valuable assets and earn money from property businesses rather than invest in gilts and bonds.”

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