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Scheme pension still can’t fund MIR after amendment

The Treasury will not allow investors to use scheme pension to fund the minimum income requirement for flexible drawdown despite the Department for Work and Pension’s decision to reclassify the arrangements as defined benefit.

In April, the Government dealt a blow to pension providers and IFAs after it blocked the use of scheme pension to fund the £20,000 MIR. The rules state that payments of scheme pension will not count towards the MIR unless it is made from a money-purchase scheme with 20 or more pensions in payment.

Last month, Money Marketing revealed an amendment to the Pensions Bill means that scheme pension will now be classified as DB. Some advisers had hoped the reclassification would allow the Treasury to revisit its decision to prevent scheme pension from small schemes being used to satisfy the MIR.

However, a Treasury spokes-man says: “The DWP case concerned regulatory rather than tax definitions, so the judgement does not affect the definitions for, or application of, tax rules.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “The Government is in danger of confusing the issue by saying DB means one thing to one department and another to another department.”


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  1. It does make sense as there isnt the employer or PPF to bail out the scheme if the actuaries have miscalculated on the investment returns, mortality rates etc.

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