Business News
Coalition overhaul pension rules
The Conservative-Liberal Democrat coalition government has pledged to scrap the requirement for investors with pension funds to buy an annuity by the age of 75.
This would mean that pension funds could be invested for longer, with the ability to take money directly from them, to provide an income for life - this is known as "income drawdown" or Unsecured Pension (USP.) This option is already available but only until age 75. As this carries more risk, income drawdown is normally only recommended for wealthier investors with at least £200,000 in their pension fund. It can also be a useful way of passing money on to heirs who will receive the balance of the fund less a tax charge (currently 35%) whereas buying an annuity means giving your fund away to a life company with limited options for protection of spouse or dependents.
Existing options to avoid annuity purchase at age 75 include Alternatively Secured Pension (ASP) and Scheme Pension, both of which are aimed at high earners and people with significant pension assets.
It is not yet known whether the annuity age limit will just be raised or if it will be scrapped totally or what proposals the new government may have for amending the tax charges on death.
The government is also considering allowing individuals to access their pension funds before they retire.
If you would like to speak to an adviser regarding your pension or your retirement options please call LRH Wealth Management on 01422 360788 or email us wm@lrh.co.uk
