The Inland Revenue should change its latest proposals on death benefits, urges the Society of Financial Advisers, as the rules are both unequal in their treatment of different pension types as well as "too complex".
Responding to the Revenue's second pension simplification paper published in December last year, SOFA says the proposals for post age 75 death benefits - allowing any surplus funds after death to fall back on to the scheme and its members - will create inequalities between different kind of pension savings.
In particular, the suggested rules are putting personal pensions at a disadvantage as they can only apply to occupational schemes.
Bob Bullivant, managing director of SOFA, says: "One of the greatest benefits of the simplified approach is that there is equality of treatment regardless of pension type other than in the area of death benefit post age 75."
SOFA is also concerned the post-retirement death benefits where an annuity is chosen are too complex.
To rectify these problems, the Society suggests proposals should allow transfer of any excess funds to another registered scheme. By doing this, "equivalence is restored", Bullivant says.
Furthermore, it would also simplify the regime while at the same time taking into account the governmenmt's decision not to allow capital to pass to the next generation, he adds.
That said, SOFA's concern with the 'complexity' of the coming legislation could be overrated if its pledge these issues should continue to be handled only by specialised pension advisers - who have passed the Chartered Insurance Institute G60 paper - comes through.IFAonline
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