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The Government looks set to close an annuity loophole as it performs yet another u-turn on pensions policy. Rules that came into force in April allow people to avoid buying an annuity by the time they reach 75. Instead, they can take out an Alternatively Secured Pension (ASP), which is invested in a range of assets. They draw an income from their fund – up to an agreed maximum – and any money left over when they die can pass onto their heirs. These freedoms were hard won and they could now be at risk.
Ed Balls, the economic secretary to the Treasury, has made it pretty clear that he wants to clamp down on ASPs, writes Robert Budden in FT Money. Balls told Parliament earlier this month that it was never the Government’s intention to allow the schemes to benefit a “small and wealthy” minority. ASPs were introduced after lobbying by the Plymouth Brethren, a Christian group that objects to profiting from the death of others.
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However, the Finance Bill doesn’t mention religious exemptions and thousands of pensioners have legitimately taken advantage of the new rules, according to John Greenwood in The Daily Telegraph. The comments by Balls have unnerved the pension industry, which is now mounting another effort to preserve the greater flexibility offered by ASPs. And how will the Government distinguish between the devout and the devious? As Ian Cowie writes in The Daily Telegraph, will tax inspectors really have to inquire about church attendance records?
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