As you may be aware the Government have confirmed an intention to end compulsory annuitisation at age 75. We know that this will be very good news for some of our clients. This article is simply to keep you up to date with what is going on.
INTERIM MEASURES
In an attempt not to disadvantage anyone reaching age 75 within the near future the Government have confirmed that there is no need to annuitise until age 77 and in the meantime the Government are “consulting”.
CONSULTATION
The Treasury have now issued a consultation paper with proposals to take effect from April 2011.
The key proposals are:
- There will be no formal requirement to take benefits from a pension scheme at any upper age.
- Lump sum death benefits paid from a drawdown scheme or after age 75 will be subject to tax at 55%.
- In future there will be two types of “Drawdown Scheme”, capped which is similar to the current scheme (unsecured pension) which imposes a maximum income and a new concept “flexible drawdown”.
- Under the proposed terms of flexible drawdown it will be possible to drawdown unlimited amounts subject to being able to demonstrate that you have satisfied a Minimum Income Requirement (MIR). The exact sources or level of this MIR is not set out in the consultation.
ACTION REQUIRED
Take advice on your pension affairs from a qualified and independent financial adviser. There are now many more options to look at retirement
Carole Nicholls
July 2010