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Pension project in limbo as limit goes to audit test

The entire pension simplification review has been left in uncertainty after Chancellor Gordon Brown in his pre-Budget report on Wednesday ordered the National Audit Office to review the numbers affected by the £1.4m lifetime limit.

Product providers say the Treasury is holding a gun to the head of the industry by threatening to drop the programme if it is proved wrong on the numbers, with no decision until the next Budget.

The NAO will determine if the current earnings&#39 cap is equivalent to £1.4m and if it affects 5,000 or the far greater figures estimated by industry experts. Brown will then decide between the limit or keeping eight different tax regimes.

Life offices and advisers say the Treasury&#39s timetable of implementation by April 2005 is unrealistic and likely to cause chaos as nobody will know if simplification will go ahead until next spring. The delay leaves high-end IFAs unable to advise clients.

The Inland Revenue is planning to cut the penalty charge for sums over the limit from 33 to 25 per cent and restore drawdown death benefits before age 75. Pension investment in residential property will be allowed.

Scottish Equitable pensions development director Stewart Ritchie says: “I do not understand why April 2005 is sacrosanct when so much remains uncertain and why does it have to be all or nothing?” Scottish Life head of pension strategy Steve Bee says: “The Treasury has a gun at the pension industry&#39s head. Rather than changing the limit if they are wrong, they are threatening to drop the entire simplification proposal altogether.”

Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “This is outrageous blackmail. The new legislation is good so to lose it all over something as stupid as the level of the limit is ridiculous.”


New trust from new company

New Scottish fund management company Edinburgh Partners has established the EP global opportunities trust, an investment trust that invests in undervalued companies around the world. Edinburgh Partners was founded earlier this year by Sandy Nairn and Graham Campbell, who previously worked together at Scottish Widows Investment Partnership. They will be the lead managers of the […]

Prudential bond wraps up for Christmas

PRUDENTIAL FLEXIBLE INVESTMENT PLAN Type: Unit-linked portfolio bond Aim: Growth and income by investing in choice of five Prudential bonds Minimum-maximum ages: 18-89 Minimum investment: Lump sum £10,000 Allocation rates: Initial charge option &#45 £10,000-£19,999 &#45 102%, £20,000-£49.999 &#45 102.5%, £50,000- £74,999 &#45 103.5 £75,000 and above £103.75% No initial charge option – £10,000-£19,999 &#45 […]

Close Fund Management launches Japan fund

Close Fund Management is launching a Japan accelerated performance fund aiming to provide capital protection and enhanced return on the Nikkei 225 index over six years. The fund, which is open until December 11, is designed to offer five times the growth of the Nikkei subject to a maximum return of 100 per cent. Unless […]

Abbey fined £2.32m by FSA

Abbey National companies have been fined £2.32m by the FSA for serious compliance failings. Abbey National plc was fined £2m for breaches of the FSA&#39s money laundering rules, while Abbey National Asset Managers Limited was fined £320,000 for systems and controls breaches. The FSA says both cases reflect wider control failings including inadequate monitoring of […]

Tapering of annual allowance – adjusted and threshold income

The definitions of adjusted income and threshold income used to determine whether, and to what extent, someone’s annual allowance will be reduced can be confusing.  Here we try to make sense of it all. The annual allowance will be reduced for high income individuals from 6 April 2016.  Our previous article Tapering of annual allowance […]


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