Fewer than 3,000 people have opted for an alternatively secured pension since A-Day and 40 per cent of them have pension pots under £100,000, according to newly published data from HM Revenue & Customs.
Responding to a freedom of information request from AJ Bell, HMRC revealed that in 2007/08, 389 of the people in an Asps had funds worth less than £50,000 while only 166 people had pots worth more than £500,000.
AJ Bell chief executive Andy Bell says this proves the current Asp tax regime is not just affecting the super-rich and is calling for the Government to lower the tax from 82 per cent to 55 per cent. He says: “We have long been campaigning for a change in the total tax charge applied to Asp funds on death. The Government’s irrational concerns that ASP would be a tax-planning tool for the rich are clearly totally unfounded. The Conservatives have accepted there is a powerful case for reform in this area whereas the Government has unfortunately put its head back in the sand.”
Bell says overseas transfers are rocketing as UK pension savers seek safe havens abroad and innovative onshore structures designed to help avoid the 82 per cent tax are starting to contaminate the pension landscape.
He says: “The current Asp tax regime is distorting behaviour and this is costing the Exchequer. As ever, wealthier individuals are able to find ways around this penal tax while those with smaller funds who do not want to buy an annuity are faced with an 82 per cent doomsday tax.
“To have confidence in pensions, savers need to understand what happens to their pen- sion fund on death. Legislation that taxes unused pension funds at either 0 per cent, 35 per cent or 82 per cent depending on age and whether the person has commenced benefits is ludicrous.”