Pre-Budget proposals to crack down on alternatively secured pensions have been branded a return to the “old socialist tax regime”.
Baigrie Davies director Amanda Davidson says the Government, by introducing tax charges of up to 82 per cent on death benefits, has gone as far as it could without scrapping Asps completely.
She says: “This is a return of the old socialist tax regime. There is absolutely no point in doing it now unless you want to pass on funds to charity.”
Aegon head of pensions development Rachel Vahey says the Government has “taken a sledgehammer to crack a nut” and says the pre-Budget measures will stifle innovation in the at-retirement market.
Skandia Life head of marketing Billy Mackay says the proposals show the Government’s continued unhealthy fixation on annuitisation. He says: “Putting up barriers against Asps is a strange thing to do. Many people want to take control of their funds and Asps provided a way of doing that.”
Norwich Union head of pensions Iain Oliver says: “Gordon Brown has taken a wrecking ball to Asps.
“At least he has not scrapped them completely, which was our greatest fear.”
Proposed Asp measures
- Minimum income requirement of 65 per cent of the annual amount of a comparable annuity for a 75-year-old
- Unauthorised payment charge of up to 70 per cent where, on the death of a member of dependant of a memeber, any remaining Asp funds are transferred to pension funds of other members of the scheme
- Increase in the maximum annual withdrawal of income that is permitted from an Asp fund to 90 per cent of the annual amount of a comparable annuity for a 75-year-old
- Removal of the facility to make payments under a guarantee from an Asp fund
- Lump-sum death benefits allowed to be paid to charity at nomination of scheme administrator, where there is no member nomination