Personal pension funds could be passed to family members as death benefits after age 75 under an amendment to the simplification proposals being considered by the Inland Revenue.
Revenue simplification head Peter Hopkins is understood to have reacted positively at a recent industry meeting to a proposal to redress the inequality between occupational and personal pension regimes.
The Revenue's pension simplification proposals published in December create an income drawdown-style alternative to annuity purchase called “alternatively secured income”, with any funds left over on death paid to other members of the scheme.
Under the new rules, current draft small occupational schemes set up with family members would be able to pass down funds on at death, whereas for personal pensions the residue would pass to the life company or a nominated charity.
Pension expert Bob Bullivant has proposed that the Revenue should extend the option to allow funds to be passed to any registered pension to create a level playing field.
The proposal is understood to appeal to the Revenue because the funds would not be passed outside the tax regime while appeasing the anti-annuity purchase lobby by allowing benefits to be passed after death. The policy would also address undersaving for pensions, says Bullivant.
Bullivant says: “We are saying why not allow people to pass pensions on to the next generation? It would answer the anti-annuity feeling and remove the inequality between Ssass and Sipps.”
Winterthur Life pension strategy manager Mike Morrison says: “This proposal seems a sensible solution between the Inland Revenue who says you cannot pass down your pension pot and the man in the street who says it should be mine to pass on.”