Pension providers are calling on the Government to extend a relaxation around pension transfers indefinitely, beyond the October 2015 deadline.
The Finance Act, which became law in the summer, removed stringent requirements on members with entitlement to higher tax free cash who wanted to transfer to new schemes and take advantage of the Budget freedoms. Previously members could only retain their rights to greater than 25 per cent tax cash if they bought an annuity with the remainder, or transferred to another scheme. However, rules required the member to find a “buddy” to make a block transfer at the same time.
Now savers can retain their entitlements as long as they designate the remaining funds to an income stream by October 2015. However, providers are calling for the relax-ation to be made permanent. In its response to the Taxation of Pensions Bill consultation, Old Mutual Wealth said the bill should “extend this relaxation indefinitely”.
“Also the requirement that all benefits from the scheme must be taken at the same time should be similarly relaxed to enable those with such protections to shape their withdrawals from their pension scheme to reflect their lifestyle needs”, the firm added.
Standard Life head of pensions strategy Jamie Jenkins also wants an extension. He says: “It was always a bit of a nonsense that you had to find a buddy. It’s reasonable that people aren’t time-bound on decisions like this that are quite complicated.”