With less than a month until A-Day, the Association of British Insurers (ABI) is lobbying the Government to release final details and clarification on a number of outstanding issues and regulations.
Although there is a large list of issues from the Finance Act, which need clarification, the ABI has been focusing most of its attention on the rules covering the recycling of tax-free cash, how Inheritance Tax (IHT) rules will apply to pensions, particularly the Alternatively Secured Pension (ASP), and the relationship between enhanced protection and life cover contributions.
On the issue of tax free cash, the ABI has asked Her Majesty’s Revenue and Customs (HMRC) to either remove or fundamentally change the proposed rules, as it raises major concerns over excessive liabilities ad burdens placed on providers and scheme administrators.
It has also been in contact with HMRC to try and flesh out the likely direction of IHT rules on pensions, although it says the position still remains unclear, as in its latest Tax Simplification Newsletter stated “We cannot be precise about timing but Ministers are aware of the Industry’s wish to have clarity as soon as possible, and we will do our best to meet that.“
And although HMRC last week published an extension to the original rules relating to enhanced protection and life cover contributions, the ABI has asked the Revenue for firm clarification on the relationship, as the extension only specifically mentions regular premium term assurance life policies.
But apart form these three key issues, the ABI has also been lobbying the Government on the following outstanding issues which have yet to be resolved in time for A-Day:
- The classification of Money Purchase Pensions
- Unauthorised Payments: Pre-A-Day entitlements
- Ill-health pensions
- State pension integration
- Definition of “dependant”
- Short service refund lump sums
- Trivial commutation
- Serious ill-health lump sums
- Trivial commutation lump sum death benefit
- Meaning of “extinguishes the member’s entitlement to benefits”
- Assignment of Term Insurance Policies (S226A and Personal Pension)
- Taxation of PCLS where pension reduced
- Calculation of the Initial Member Pension Limit for Dependants’ Pensions
- Calculation of increases for Dependants’ Pensions
- Calculation of Pension Input Amount following a transfer from a DB scheme
- Five-year guarantees
- Surrender of excess rights before registering for enhanced protection
- Existing Income Withdrawals which will become Designated for Unsecured Pension
- The requirements for unsecured pension
- Transitional protection of lump sums exceeding 25%
- Treatment of reducing pensions
- “Relevant benefit accrual” for defined benefit members with enhanced protection
If you would like more detail on any of these issues please click here where an extended version of the issues and the implications are presented in more detail.
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
'Exact timescale' of complaints not yet provided
1,400 reviews of adviser technology
To engage next generation
Now accessible to all
Some scheme’s ‘fib’