Rowanmoor Pensions responds to George Osborne's Budget 22 June 2010
Restricting pensions tax relief
Robert Graves, Head of Technical Services, Rowanmoor Pensions and Chairman of AMPS welcomes today's Budget announcement that there will be industry consultation before a decision is made on restricting higher rate tax relief on pensions:
"We very much welcome the Chancellor's statement announcing that there will be consultation with the industry to look at alternative ways of restricting pensions tax relief. It shows that industry concerns have been recognised regarding the complexity and unwelcome consequences that would have resulted from pressing ahead with the approach adopted in Finance Act 2010.
"Although the industry-favoured alternative of reducing the current Annual Allowance appears to be the front runner I have concerns that in particular the lower end of the suggested reduced Annual Allowance quoted to be in the range of £30,000 to £45,000 would be too low. This is a lower contribution than was allowed under pre A-Day rules. I have particular concerns on how this would impact the self-employed and small business owners who can only make pension contributions when their business profits allow.
"There was also a line referring to taking account of the appropriate level of the lifetime allowance. If this signals a reduction in the lifetime allowance could we be seeing another complication being added of having another round of enhanced and primary protection? Not such a welcome thought.
"We look forward to being involved in the consultation process to help bring about appropriate change."
Age 75 rule
Robert Graves, Head of Technical Services, Rowanmoor Pensions and Chairman of AMPS welcomes today's Budget announcement that compulsory annuitisation at age 75 is to be abolished.
"True to the Conservative Party's manifesto pledge, the Government has announced that it will launch consultation on changing the current rules requiring pension income to be secured by age 75.
"What is surprising is that transitional arrangements have been brought in with immediate effect. It appears that Unsecured Pension rules have been extended from age 75 through to age 77 with changes also being made to only apply a 35% tax charge on death after that age as opposed to the existing 82%. This is welcome news although it is not yet clear whether lump sum death benefit payments will be an authorised payment. Consultation on what will replace this interim measure in April 2011 is to be welcomed."