Passing funds in pensions between generations after A-Day should not be limited to small self-administered schemes but should be allowed for all types of pension, says Winterthur Life.
Pensions strategy manager Mike Morrison is calling for the Inland Revenue to allow funds remaining at death after age 75 to be passed to any person nominated by the deceased, provided it remains within that person's pension.
As currently written, A-Day rules for alternatively secured pensions will allow funds after age 75 to remain within a scheme for the benefit of members of that scheme. This has led pension experts to predict a growth in Ssas business as wealthy people bring their children into their scheme to allow pension wealth to be passed between the generations.
Morrison says the situation could arise where funds held in an Ssas with a provider could be passed to a personal pension with that provider as both funds form part of the provider's overall scheme but could not be passed to the personal pension of another provider. This would unnecessarily increase cost and complexity, says Morrison.
He says: “If the Revenue wants true simplification, then they should simply say that pension funds remaining at death after age 75 can be passed on to beneficiaries, provided that the funds are paid into a pension fund. This would make pensions more attractive and provide pensions for people down the line.”
Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “This is a very clean way out of a situation that is likely to create complexity and cost. The person receiving the funds cannot get hold of them until they are aged 55 and the Revenue does not lose out.”