Aegon Scottish Equitable is the second provider to announce it will continue to process pipeline policies for pension term assurance.
The company says it has been reviewing its options for pipeline PTA business since the Treasury announced in the pre-Budget Report it may remove tax relief on PTA because they were being sold as standalone policies rather than as part of a pension proposition.
As a result, Alun Beynon, head of individual protection at Aegon Scottish Equitable, says although the company will not take on any new PTA business, it has decided the “most appropriate course of action for our customers” is to continue processing pipeline policies as PTA.
However, he says the policies will include an endorsement which will allow the cover to “continue in force in the event the government carries out its proposals to remove tax relief”, by stating if the tax relief is removed the policy will convert to an ordinary term assurance.
Aegon says this means policyholders will continue to pay the premiums net of basic rate tax, but it says if the final Budget continues the proposals set out last week and backdates the abolition of tax relief to 6 December, Aegon is prepared to bear the cost of the basic rate tax relief for the period between the Pre-Budget and Budget statements.
Beynon says: “We believe this approach offers the greatest flexibility for policyholders in what remains an uncertain environment. This solution also ensures that advisers continue to secure cover for their clients while avoiding delays in commission payments.”
The announcement follows a similar move by rival insurer Norwich Union, announced yesterday, and is in contrast to a number of providers who have withdrawn from the PTA market since the pre-Budget Report, although Aegon says it will continue to lobby government to “act in the fairest interest of both customers and the industry in general” on this issue.
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