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Single life has its appeal

The Government says it intends to legislate for a UK real estate investment trust in the 2006 Finance Bill. The IMA says this amounts to a delay in the timetable for the introduction of Reits.

The Government is to consult on evelling the playing field for pension and lifetime annuity tax-free lump sums.

As the new pension tax simplification rules stand, there is a perverse incentive for married people to buy single-life pensions. Leaving a spouse off the annuity increases the amount of the tax-free lump sum under a pension bec-ause it is calculated as six-and-two-thirds times the pension.

For example, a 74-year-old man could get more than 40 per cent of his personal pension or stakeholder fund as a tax-free lump sum by buying a single-life level pension.

On the other hand, lifetime annuities can only provide a maximum of 25 per cent of the fund tax-free.

If the rules set out in the 2004 Finance Act are unaltered, there is a danger that older women pensioners, already the poorest in the country, will become even poorer because their husbands would buy singlelife rather than joint-life annuities. The Revenue’s consultation is therefore welcomed.

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Leading Edge – April 2017

There is little doubt 2017 will be a year of political uncertainty. Leading Edge is Royal London Asset Management’s regular review of investment markets. This edition explores some of the impacts that this uncertainty is having on investors, from the pitfalls of prediction within UK equity investing to the dangers of opting for convenience over […]

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