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Life offices don&#39t want Revenue&#39s drawdown cash

Income-drawdown providers are objecting to Inland Revenue proposals

that will give them cash windfalls if clients die before 75.

The Revenue&#39s pension simplification proposals, published in

December, limit death benefits on drawdown to the value of the

retirement savings paid in, less income taken out. Funds over this

through investment growth, would be paid to the drawdown provider.

Providers and advisers say drawdown would suffer the bad press that

annuities now receive if consumers hear that life companies take

investment returns generated by their portfolios.

The Revenue says the move aims to ensure that drawdown receives the

same treatment as funds in annuities but says it will consider

providers&#39 views.

Norwich Union spokesman Ian Beggs says: “We do not want this money

that the customer&#39s estate should get back. It does not look good for

life companies to be pocketing money like this. This is not a good

story to communicate – it is much simpler to tell someone that all of

their money goes back.”

Income Drawdown Bureau director Ronnie Lymburn says: “The Revenue

seem to be relaxed about people taking advantage of the old rules

before they disappear.

“Undoubtedly, IFAs will see this as an opportunity to tell their

clients to get in now while stocks last. But giving a windfall to a

life company is not a good message to give a client.”

An Inland Revenue spokes-man says: “This is a consul-tation and we

welcome all views. Nothing is set in stone.”

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