Want exemption from annuity requirement?

okane_2

Then get God....check this out:

From Tom McPhail (Head of Pensions Research, Hargreaves Lansdown):
The Government believes that everyone who saves money for their retirement must buy an annuity with their pension fund by the time they reach the age of 75. This means that you have to hand over your cash to an insurance company, and when you die, the money is lost.

Unless you are a member of the Christian Brethren, that is.

This small religious group has managed to convince the Government that they and they alone should be exempt from these rules. The Government has created for them a special arrangement called an Alternative Secured Pension (ASP). One of the rules of the ASP, is that when you die you can pass your pension fund on to your children’s pension fund, but only if you are a member of the Christian Brethren.

If you find this hard to believe, and in spite of the fact that I work in pensions and have been aware of this for months, I’m still struggling to comprehend the enormity of it, then check this quote from Ed Balls, Economic Secretary to the Treasury, from Hansard 4th July (Column 728, if you are interested).

“As the hon. Member for Fareham reminded us, we have also introduced an alternatively secured pensionASPfor pension scheme members who have not secured their pension benefits by age 75, where the member has a principled religious objection to the pooling of insurance and mortality risk. As the hon. Gentleman knows, and as the quotation from my right hon. Friend the Member for Bolton, West (Ruth Kelly) to which he referred makes clear, it was always our intention that the rules would apply in the specific and narrow case of individuals with such principled religious objections such as the Christian Brethren. It
has always been our intention to replicate the secure lifelong income obtainable from an annuity through those measures, but not to allow that to become a way in which a small and wealthy minority could benefit substantially from tax advantages to the cost of taxpayers overall. We have always made it clear that we shall not allow those concessions to be taken up more broadly to get round the annuity rules. This is not a mainstream product and it must not become a tax avoidance measure. We shall not be going down that road.”

We believe that this policy is wrong (actually it is wrong on so many levels that it makes my head hurt), so to try and do something about it we have set up a petition on our website. The address is https://www.hargreaveslansdown.co.uk there will be a link up from this homepage to the petition from Friday 14 July 2006. If you feel that this is something you would like to support, then please visit our petition and pass the link on to anyone who you think would also be interested.

Chrismaths

Anyone is eligible for ASP, irrespective of religious belief.

wotsthat

Strange but true....

Here's a link from the FT - apparently the government don't want people 'misusing' the ASP opportunities.

http://www.ft.com/cms/s/ccb1c028-1326-11db-9d6e-0000779e2340.html

I had to check it wasn't April 1st when I read this. ASP's were designed for people with a strong religious aversion to annuities and not for people who'd prefer to leave money to their family rather than an insurance company.

It's like Logan's Run - can anybody over the age of 65 stop being selfish and do the decent thing and just drop dead?

EdInvestor

This is the kind of thing which should make people think twice about putting any money into pensions. Save in other ways where you retain control over your capital and income.

cheerfulcat

Chrismaths wrote:

Anyone is eligible for ASP, irrespective of religious belief.

The government has made it very clear that it only ever intended ASP for those who had religious objections to annuities. This is one thing which they have said more or less from the start and I don't quite understand why so many people, including most of those in the financial services industry, thought otherwise. From the horse's mouth, here.

EdInvestor

From the link

. The Government provides generous tax relief on pensions on the basis that pension funds are used to secure an income in retirement.

Then why on earth did it abolish the rule where people had to take a minimum income from drawdown?

The pensions tax simplification rules provide that an individual must secure an income before they reach the age of 75. For most people an annuity or scheme pension is the best means by which they can do this.

On what basis does the Government think this? Has this view ever been explained? Does it emanate from the old days of high inflation, high interest rates and comparatively widespread final salary pensions? Conditions are very different today.

And why does the Government apparently assume that everyone who objects to compulsory annuities is a) rich and b) attempting to use the pension system to avoid inheritance tax?

This simply isn't so.

klondyke

EdInvestor wrote:

From the link

On what basis does the Government think this? Has this view ever been explained? Does it emanate from the old days of high inflation, high interest rates and comparatively widespread final salary pensions? Conditions are very different today.

And why does the Government apparently assume that everyone who objects to compulsory annuities is a) rich and b) attempting to use the pension system to avoid inheritance tax?

This simply isn't so.

I don't reckon this Government thinks at all. Anyway, have 'signed' Hargreaves Lansdown petition, and hope others will (see OP for link).

Actually, yes, we would want to use the system to avoid IHT if poss, but even at 40%, leaves 60% for the kids, so wouldn't grumble too much (maybe!). But to have saved for nothing is iniquitous.

blackanchorage

I'd sign a petition requesting they stop ASP's, because I don't see why religious people should get any sort of exemption from the rules.

The rules are quite clear, so if you don't want an annuity, don't invest in a pension. I personally think annuities are great - a guaranteed income for life, no matter how long you live. I don't want money from my parents, and my children should be self-dependent.

Regards, Roger

cheerfulcat

blackanchorage wrote:

I don't want money from my parents, and my children should be self-dependent.

Regards, Roger

What about your wife?

blackanchorage

We will probably get an annuity that would pay out until we're both dead.

Regards, Roger

cheerfulcat

Have you any idea at all of how expensive that is? Unless you have a very large pension " pot ", or either or both of you are in poor health, your income from a joint life annuity is going to be very small indeed considering that you are giving up all of the capital ( another reason why people would prefer not to have to buy an annuity ).