Individual pension accounts (IPA) and unit trust personal pensions (UTPP) may be abolished next year...
Individual pension accounts (IPA) and unit trust personal pensions (UTPP) may be abolished next year, as the Government conducts a review into the structure of the product.
Virgin, along with Gartmore and Nationwide, operates personal pensions via a unit trust constructed using feeder funds.
Although Gartmore has a closed book of business, Virgin's remains active and has some £200m in assets.
The Government has indicated to Autif it will abolish feeder funds, making IPAs and UTPPs impossible to operate.
Autif is using this review to push for a simple Isa-style personal pension. Richard Saunders, director general at Autif, said: 'We need a wrapper that delivers the tax relief but deals with the critical issue of a mutual fund being open-ended and the need of tying up the assets until retirement.'
The Government introduced the IPA last year but, due to its complexity, Virgin is the only provider to have adopted it. The IPA has not been successful, Saunders said, because Revenue rules for an approved personal pension limit the wrapper portion to a life office or an irrevocable trust.
Saunders said: 'A unit trust passes that test but then runs straight into the problem that the regulations governing collective investment schemes require units to be redeemable at any time.'
Virgin got around the situation by using feeder funds in its IPA.
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