Pensions & divorce – The end of compulsory annuitisation?
Posted July 30th, 2010
From 2011/2012 the Government announced in its budget their intention to remove the compulsory need to purchase an annuity from age 75.
As an interim measure, legislation will be written into the Finance Bill 2010 to increase the purchase age to 77. This increase in the age to 77 by which time the member must secure an income has effect on or after 22 June 2010. The change applies equally for Inheritance Tax purposes to members who die on or after that date.
Since April 2006, it has not been compulsory to purchase an annuity at age 75 (although some individual schemes insist on it) when an alternatively secured pension (asp) became an option. ASP has not been universally popular due to the poor income rates and punitive tax charges (up to 82% on death!).
The Government intends to consult shortly on the finer detail of what is planned. Watch this space on developments which in my opinion, will have far reaching implications for divorce, annuities, annuity rates and retirement planning.
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