Annuities change unfair, pension firm director says

A director of a pensions firm has suggested a change to annuities announced in the Autumn Statement was unfair. Chancellor George Osborne said yesterday he was bringing annuity death benefits into line with drawdown.The abolition of the pensions death tax was announced at the Conservative party conference in October but details were added to this in the speech to Parliament.Mr Osborne said: "I confirm that the 55% death tax that currently applies when you pass an unused pension pot on to your loved ones will be abolished. People will be able to pass on their pensions to their loved ones tax free."I can also tell the House today that we will ensure that people who die before the age of 75 with a joint life or guaranteed term annuity can pass that on tax free too."Simon Nicol, pensions director at Broadstone, said: "It seems a little unfair now that the widow whose husband died last year should pay tax on her £20,000 annuity pension, or the Defined Benefit spouse pay tax on her income, whilst the widow whose husband dies next year could pay no tax on her £20,000 annuity pension"Matthew Brown, executive and retirement services director said: "Like a good bookie the Chancellor played the odds game."Statistically if you are of an age where you can draw your pension and buy an annuity you are very likely to survive to age 75."Therefore, whilst not taxing spouses pensions and guaranteed periods under 75 is very welcome, the number of people that will benefit is relatively small."Conversely being able to leave ISAs in situ will benefit a great number of people and whilst it doesn't have the razzle dazzle of some of the pension announcements of the past year it will be hugely beneficial." {desktop}{/desktop}{mobile}{/mobile} John Fox, founding director of Liberty Sipp, said: "It was very much after the lord mayors show for the pension world with the statement. Obviously the confirmation of the 55% recovery charge biting the dust and a levelling of the playing field for annuity holders in relation to this matter is most welcome. "The ability of ISA's to be passed on free of tax looks interesting from a savers perspective, but I don't think that it means that ISA's will prove more popular than pensions in relation to tax planning as it looks like they will still be party to IHT on the death of the second spouse. I was just delighted that there wasn't a Gordon Brown style "U turn" like in 2005 – I don't think I was the only person in pensions with this nagging fear. "It still means that 2015 will mean a paradigm shift for the pensions world and open up a whole range of Financial Planning opportunities for savers and their advisors."

Annuities change unfair, pension firm director says

Related items

News from Twitter