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Is the Treasury about to make an Asp of itself?

A lot of advisers probably think that the Government has been talking out of its Asp in recent weeks.

IFAs have been warned by the Treasury that if they use alternatively secured pensions to – in its view at least – avoid inheritance tax in large enough numbers, then the Asp will be abolished.

Unfortunately, even if advisers wanted to obey this Treasury edict, they may not be able to.

First, as Standard Life is arguing, IFAs advising company schemes could be placing trustees at risk of breaching legislation outlawing discrimination on religious grounds.

The ASP is designed to give the Plymouth Brethren a way to receive their pension without buying an annuity. But in denying other non-Brethren members of a scheme they may be discriminating against them on religious grounds and could be in danger of breaking the law.

Now, Aifa has waded into the debate. It is telling IFAs that they must advise clients of all of the options, including Asps, regardless of their beliefs.

Aifa is saying that it does not matter what the Treasury thinks about how legislation and regulations should be used – what matters is that IFAs follow what the law and the regulations say.

In this case, IFAs must make their clients aware of Asps and their potential benefits, inheritance tax and all.
So it would appear that the industry and the Treasury are on a collision course.

The industry says it has to apply the law as the law stands, no matter what the intention of those who wrote the legislation was or is. The Treasury – blaming the industry – may axe Asps because it believes they have been abused.
Wouldn’t it be better if someone did some calculations into the actual impact of Asps being used widely on Government revenues.

If this is, as some suggest, a tax-neutral or even tax- beneficial situation, then the Government could adjust its position without having to make another dreaded U-turn. Then the pension industry could get on with giving proper pension advice.


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Reality bites on Asp figures

Do those allegedly intelligent people in the Government understand what they are talking about? As a result of pension simplification (remember, this was the Government in action) we have the alternatively secured pension. In the discussion phases of pension simplification, this was “wealth cascading down the generations”. Then those clever people at the Revenue noticed […]

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