Government proposals to allow flexible retirement for millions of people in occupational pension schemes have come under fierce criticism from life offices.
The Inland Revenue has proposed allowing employees to take pension benefits at any time between the ages of 50 and 75 without fully retiring. Income drawdown from company schemes is also included in the proposals.
But life offices believe the proposals will unleash a massive problem of best advice, cent ring on the clash of two tax and benefit regimes under the Finance Acts of 1987 and 1989.
The Revenue wants to limit flexible retirement to occupational scheme members who are covered by or transfer to a scheme covered by the Finance Act 1989. This has sparked fears that schemes and their members will need urgent advice on their eligibility.
Scottish Equitable is urging the Revenue and the Financial Services Authority to make it a regulatory requirement for schemes to take advice on the issue. Pensions development manager Steve Cameron says: "Individuals should only go down this route if they have taken advice. We would like to see the Revenue and the FSA looking at this issue."
But life offices including Winterthur Life and Stand ard Life want the Revenue to ditch its proposals. They want occupational scheme members to be allowed to transfer to a personal pension and take drawdown or partial retirement. They claim this move would simplify the process.
Transfers from occupational schemes are currently restricted. High-earners and shareholding directors can be prevented from transferring.
Standard Life marketing technical manager Margaret Craig says: "Company directors should be able to transfer. It would make the system easier, simple and better to lift the transfer restrictions."