The proposed removal of carry forward/back as of April 2001 will not affect Retired Annuity Plans (R...
The proposed removal of carry forward/back as of April 2001 will not affect Retired Annuity Plans (RAPs).
The Government's consultation document released in September suggested that this tax planning tool will be removed on pension products within its proposed over-arching defined contributions regime.
This would include stakeholder, GPPs, personal pensions, Sipps and SSASs.
However, the Government has left RAPs outside this regime and therefore, carry forward/back could still be utilised by that vehicle.
Since the emergence of personal pensions in 1988, no new RAPs have been sold.
Roderic Rennison, retail director of Mercury Life, said: "RAPs are outside this new regime and as such they continue to escalate in terms of their attractiveness for significant earners."
There are a number of advantages the RAPs offer compared to personal pensions, such as the level of tax free cash the scheme member can take.
Steven Cameron, pensions development manager at Scottish Equitable, said: "In future there will be a number of differences between increments to RAPs and contributions to personal pensions. Key differences are that RAP retain carry back/forward and contributions will continue to be paid gross, whereas with personal pensions in the future they will be net. "
It appears the Government may relent to some extent on the abolition of carry forward/back, fllowing industry lobbying.
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