View more on these topics

Govt softens block transfer rules ahead of pension freedom shake up

A Government amendment to the Finance Bill will make it simpler for savers with pre-A-Day company pensions to transfer to a new scheme and take advantage of new pension freedoms without losing their historic entitlements.

Before A-Day in April 2006, people in company pension schemes were able to have tax-free lump sums of more than 25 per cent of the total value of their pension.

After A-Day, savers who remained in their scheme kept the entitlement to tax-free cash worth more than 25 per cent of the value of the pension.

However, they were only able to move to a new scheme and keep the benefit if an employer wound up their existing scheme and the employee entered a buyout policy which maintained the protection or if they found a “buddy” to move with.

If they did not meet those requirements their tax-free cash entitlement dropped to 25 per cent.

Skandia retirement planning manager Adrian Walker says a Government amendment to this year’s Finance Bill will enable savers to move funds caught in old company based pensions into a new scheme without the need for a buddy as long as they take an income solution before 5 October 2015.

The Finance Bill amendment will only affect people who are 55 before 5 October 2015, with those unaffected left having to meet the buddy system rules.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Caroline Barclay 21st July 2015 at 2:32 pm

    Is there likely to be a change in the Buddy rule within the reforms the government is planning? Also why is there this Buddy scheme?

Leave a comment