The Association of Consulting Actuaries has proposed a tax framework for residual pensions in response to a HM Revenue and Customs discussion paper on inheritance tax and pensions simplification.
Proposals are designed to express the group's frustration at the paper and what it called “the continual introduction of new regulation and guidance that is tarnishing the overriding principle of pension tax simplification”.
The fundamental problem the ACA says it has relates to the inclusion of pension savings in relation to IHT as the ACA claims accumulation of capital within pension funds should be encouraged by the government, not discouraged, given most UK citizens are felt to be under rather than over-pensioned.
ACA argues in an age of increasing longevity, the concept of a level pension is outmoded for many and there is an increasing number of people keen to maintain resources to provide for potential additional costs later in life such as illness or disability.
To prevent the pressures transfer back to the state in later years, the ACA proposes changes should be made to the current pensions tax framework which among other things suggest:
Mark Howard, chairman of the ACA committee which developed the response, said:
“Most people are concerned as to whether they have adequate savings for a potentially long old age and retirement. They are worried they may have high living costs late in life, when they and/or their partners may incur disability costs, superimposed on the high cost of normal living.
"We believe this system would be widely considered as fair and would avoid abuse, avoid substantial administration costs, avoid subjective judgments and accommodate national objectives.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected].IFAonline
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