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Late boost for open annuities

Open annuities could be set for an 11th-hour boost after HM Revenue & Customs revealed that inheritance tax will be payable on alternative secured pensions and probably on drawdown.

Open annuities, which have enabled annuitants’ remaining funds to pass to their estate on death, are expected to die out after A-Day when this advantage is taken away from them.

However, many commentators expect a late rush of interest in the product after the Revenue laid out its IHT rules.

Hargreaves Lansdown head of pension research Tom McPhail says: “If you are 65 now and considering going into drawdown, which faces the possibility of IHT, or an ASP, which will definitely face IHT, an open annuity might make more sense.”

Open Annuities chief executive Ken Wrench says: “The open annuity is an option for people with bigger pension pots but the window of opportunity will soon close.”

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