By Jenne Mannion Scottish Equitable sees occupational drawdown almost always comparing unfavourably ...
By Jenne Mannion
Scottish Equitable sees occupational drawdown almost always comparing unfavourably with its personal pension equivalent.
Speaking at the group's London roadshow last week, Steven Cameron, pensions development manager at Scottish Equitable, said the group had no plans to launch an occupational drawdown product.
Cameron said drawdown may be selected to maximise lump sum death benefits via personal pensions but this does not necessarily apply to the occupational regime.
He said: "If an individual dies, their dependants can take the full fund as lump sum, subject to a 35% tax charge. That does not happen within occupational drawdown. Rather, the maximum lump sum that they can receive mirrors what they might have got had the member bought an annuity at the point of retirement.
"To use a common example many occupational pensions guarantee pension instalments for five years.
"So if an individual retired on this basis and then died two years later, surviving dependants would get a lump sum equal to three years of guaranteed instalments.
"What the dependants would receive then is five years worth of the maximum allowable, less whatever amount had been taken so far. If minimum drawdown had been taken in the first couple of years then the dependants would receive more than three years worth of the maximum drawdown."
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