Go-ahead for protected rights in SIPPs

EdInvestor

IFA online


Self investment to be allowed - but requirement to buy a spouse's pension at point of annuitisation ( currently 75 at the latest) to remain.All other restrictions to be removed.

Implementation timetable not yet clear.

EdInvestor

More on this in the FT

peterg1965

So PR money can be transferred into a SIPP if the Pension Bill is amended, great news but, someone please explain in simple english what is meant by the restriction of having a 'spouses pension'? Does this mean that when purchasing an annuity with PR money that the pension must be in joint names and continue at a '50% rate' on the death of the person whose PR money it was? Does this mean that you can still drawdown 25% of the pension investment tax free, as per other unrestricted pension pots?

EdInvestor

The idea is that all the other restrictions on PR money are dropped except the one that says PR money has to be kept separate from non PR money so that if and when an annuity is purchased, the annuity will allow for a 50% spouse's pension.

Other restrictions on PR money have already been dropped, eg you can now take 25% tax free cash, you can take the money at age 50 and you no longer have to buy a unisex annuity.

Remaining restrictions still to be lifted are the right to put a PR fund into income drawdown and self invest the money, and to move the money into an ASP at 75.At present although a PR fund can be put into income drawdown, it cannot be self invested and it cannot be put into an ASP. It must be annuitised at age 75, and other old pre A-day rules apply to a PR fund in drawdown.

So there are quite a few fiddly rules which need to be reorganised, now that we have the main commitment from the Government.

wotsthat

So PR money can be transferred into a SIPP if the Pension Bill is amended, great news but, someone please explain in simple english what is meant by the restriction of having a 'spouses pension'?

In simple English no-one has got a clue (including the DWP who have pushed for this restriction to remain) -it could have been oh so simple.

I was quite hopeful that I could invest my PR money directly in shares in April 2006. Now I suspect 2012 is more likely so plenty of time to find out how complicated it will be to enforce the requirement for a spouses pension.

dunstonh

You can put PR money directly into shares with 2 providers using insured contracts but not as cost efficient as it would be in a SIPP.

EdInvestor

wotsthat wrote: »

... plenty of time to find out how complicated it will be to enforce the requirement for a spouses pension.

Actually, that's not complicated at all (for once). It just requires the SIPP administrator to keep the PR money in a separate SIPP from any SIPP you might already have - ie you can't merge a PR pension with a pension already in a SIPP.

In many cases that would happen anyway though, as many of the people who want to move PR money into SIPPs want to put it into income drawdown , so they would likely need a separate SIPP anyway for the new incoming pension, whether the money was protected rights or not.

But I must say it doesn't take very long after you start looking at how these rules actually work to decide that, if you had your time over again, you would steer well clear of pensions :rolleyes: :rolleyes:

The assorted characters who run the pensions show seem to be amazingly determined to stop you from getting your mitts on your own money :mad:

peterg1965

EdInvestor wrote: »

The assorted characters who run the pensions show seem to be amazingly determined to stop you from getting your mitts on your own money :mad:

It is no wonder many people are put off pensions. The complexity of the rules and regulations are ridiculous, put that with the negative aspects of the pension industry; so called 'tax raid' on private pensions by GB, the pensions that have gone under and subsequent chaos of Govt policy administering the 'rescue fund' and the Robert Maxwell scandal of 20 years ago.

If only they (govt) would use the KISS principle - Keep It Simple Stupid!

The fact that we cannot have full control of our own PR money smacks once again of the Nanny State - TB/GB and their cronies just dont want to trust people and always want to interfere in every aspect of peoples lives.