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Ritchie wants IFAs to take responsibility for advice on busting pension limit

IFAs rather than product providers should be responsible for advice where people take income to avoid the £1.5m lifetime fund limit says Scottish Equitable pensions development director Stewart Ritchie.

He believes that advisers should retain responsibility for the choice of annuity where a pension provider buys in a scheme pension.

People with funds over £1.5m after A-Day will be able to avoid paying the 25 per cent recovery charge on income up to £75,000 a year if the annuity is bought by the pension provider and given as a scheme pension, effectively raising the lifetime limit to around£2.5m for most people.

But Ritchie wants the rules to make clear that responsibility for the advice about which annuity funds the income should remain with the IFA.

Individuals with more than £1.5m who take a scheme pension will be able to exercise the open market option, and should be advised in this by their IFA, he says.

Ritchie says the new interpretation of the Finance Bill allowing money-purchase as well as final-salary pensions to take income of up to £75,000 a year – revealed by Money Marketing two weeks ago – complicates the decision whether to go into drawdown.

Ritchie says: “This is a pretty significant turn-round. We are now in a position where advisers have to consider whether to go into drawdown and be hit by the lifetime limit or take a scheme pension. I want clarification that it will be the IFA on the client&#39s behalf telling us where the scheme pension should be bought.”


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