The Pensions Green Paper – week two
Money Marketing and Taxbriefs are teaming up to invite readers to put their views on the Government's new Pensions Green Paper and the Inland Revenue's tax paper by answering the questions listed here on the right.
Taxbriefs will then put your views to the Secretary of State for Work and Pensions Andrew Smith and the leader of the Revenue's pensions simplification review team Peter Hopkins at a Sofa-sponsored conference on February 6 in London.
The Green Paper contains a raft of proposals which could change the pension landscape dramatically. No adviser can ignore its contents when discussing retirement options with clients. For example, the proposals could make it attractive for some people to defer imminent retirement or make a big one-off contribution.
The many radical proposals from the Inland Revenue include:
The maximum tax-free lump sum in all cases would be 25 per cent of accumulated fund. This will create winners (mostly 1989 regime scheme members) and losers (those scheme members with very small funds and/or subject to the pre-1987 tax regime).
The maximum lump sum death-in-service benefit would simply be equal to the maximum lifetime fund (which would be £1.4m).
The earliest age for retirement would rise to 55 by 2010. It is possible that this change would be phased in.
A new “unsecured funds” tax regime would replace today's two sets of income-drawdown rules. This would allow much greater flexibility of income and could remove the requirement to purchase an annuity by the age of 75.
The pensions conference will be held on Thursday, February 6 and the venue is The London Goodenough Trust, Mecklenburgh Square, London WC1. Tickets are £435 plus VAT (£350 plus VAT for additional delegates), available from Taxbriefs, Freepost KE6 811, London EC1B 1EH. Tel. 020 7250 0967 or by sending an email to info@tax-briefs .co.uk.
The Green Paper raises many issues on which your views should be heard so that they can be conveyed to the Inland Revenue and DWP as part of the consultation process. This week, you have the opportunity to respond to the following six questions:
1: What would be the impact of the proposed changes to drawdown lump-sum death benefits?
2: How would the higher minimum retirement age affect retirement planning?
3: Would value protection (that is, capital protection) annuities be popular, given that they may reduce immediate income by around 5 per cent?
4: Would you recommend income drawdown past the age of 75 if it meant that there was no lump-sum death benefit available after that age?
5: The DWP is proposing the setting up of an independent commission to monitor the level of pension provision and consider whether compulsion is needed. Would you support compulsory pension contributions and, if so, at what level?
6: The DWP proposes to replace Opra with a new pensions regulator separate from but operating alongside and complementing the FSA. Do you support this change?
To download the Green Paper documentation, go to: