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Friends in plea to remove in-specie barriers

Friends Life is calling on the Government to relax rules that prevent some in-specie pension contributions being transferred into a Sipp.

HM Revenue & Customs legislation prevents employees from shifting investments such as Isas and unit trusts directly into a personal pension.

Investors are forced to sell the asset, put the cash into the pension and then repurchase the same investment inside the pension because rules stipulate that contributions to a registered pension scheme must be a “monetary amount”.

Friends Life corporate platform proposition manager Dan Hawkins says removing this restriction would encourage savers to pass non-monetary benefits into tax wrappers.

He says: “The current restrictions discourage pension saving. Removing some of the strict criteria around in-specie contributions would be a simple, yet profoundly important, step towards realising the Government’s ambition to ignite long-term saving. The industry-accepted solution of creating an irrevocable debt then receiving settlement for that debt in shares or units is cumbersome, costly and difficult to administer.”

The Treasury’s response to the early-access call for evidence, published in April, indicated that policymakers are willing to explore linking pensions and Isas through the “feeder fund” model.

Hargreaves Lansdown head of pensions research Tom McPhail says: “The HMRC rules on in-specie contributions represent a significant barrier to the Treasury’s stated plans to encourage investors to run their Isas alongside their pensions.

“HMRC rules mean it is virtually impossible to move investment assets between different tax shelters. Removing this barrier would be a way for the Treasury to help reinvigorate retirement saving at no cost to the taxpayer.”

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