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Providers wary over offshore pension trust claims

An offshore financial services firm is targeting IFAs with a pension trust vehicle that claims to avoid the need to buy an annuity, allows freedom to invest in residential property and chattels and permits loans from the scheme.

Providers have referred details of FSL&#39s Protected Pension Trust to the Inland Revenue&#39s trust-busting team in Nottingham to determine whether the product is a pension liberation device or a rival to the Gibraltar-based Challenger open annuity.

Marketing literature sent to IFAs by FSL describes the product as improving on the benefits of the Challenger open annuity because it allows the fund to be passed on to beneficiaries without a 40 per cent inheritance tax charge.

The company says the Protected Pension Trust is not subject to Inland Revenue approval because it is a mandatory approved scheme under section 530 of the Income and Capital Taxes Act 1988 and not a discretionary approved scheme.

But providers say they need to see evidence of Revenue approval before they can authorise transfers out of personal or occupational funds. Providers are also concerned the benefits could be outweighed by high charges.

Informed Choice managing director Nick Bamford says: “Any adviser will want to have a conversation with the Revenue to make sure this is not against the spirit of the legislation before putting their client into such an arrangement.”


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