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My PFS - Technical news - 17032015

Publication date:

13 March 2015

Last updated:

22 September 2017


Technical Connection

PFS news update from 25 February 2015 - 10 March 2015 covering taxation, investments, pensions and retirement planning.

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Taxation and trusts


The official rate of interest for 2015/16

(AF1, AF2, RO3, JO3)

HMRC has announced that 'The official rate of interest' that applies to employment-related loans will be 3% for 2015/16. However this is still subject to the necessary Treasury regulations coming into force.

The rate for the current tax year is 3.25%.

If an employer makes a cheap loan to a higher paid employee (one earning £8,500 a year or more) or a director then the official rate is used to measure the benefit to the employee which is subject to tax as a benefit in kind. The benefit is the difference between the interest (if any) paid by the employee and interest at the official rate. An employer will pay Class 1A National Insurance contributions on any taxable benefit.

There is a de minimis provision which operates so that if the loan (or total loans) for an individual at no time in the tax year exceeds £5,000 no tax charge is made.

The official rate of interest also applies in calculating the pre-owned assets tax charge on assets other than land. The de minimis provision of £5,000 also applies in this situation and is based on the chargeable amount for the year. So if someone is chargeable throughout the whole tax year and the annual benefit is calculated at no more than £5,000 no tax charge is made and they do not have to declare the benefit on their income tax return.



The transfer of ISA benefits to a surviving spouse or civil partner upon death

(AF1, AF4, RO2, RO3, CF2)


In this article we examine the impact of draft regulations to implement the ability to transfer ISA benefits to a surviving spouse/civil partner. What follows is based on draft regulations which could, of course, change before final implementation.


In the Autumn Statement, which was delivered on 3 December 2014, it was announced that the ISA rules would be amended to provide for the spouse or civil partner of a deceased ISA saver to receive an additional ISA allowance up to the value of the deceased saver's ISA at the time of their death. In addition, the additional ISA allowance would not count against the surviving spouse's/civil partner's annual ISA allowance.

The proposed changes will have effect from 6 April 2015 in respect of deaths which occur on or after 3 December 2014. These changes do not apply to the JISA.

In this bulletin we refer to the additional allowance as the "additional allowance subscription".

Who is eligible to make an additional allowance subscription?

(i) The surviving spouse/civil partner of an ISA saver who died on or after 3 December 2014. At the time of death the deceased ISA saver and the surviving spouse/civil partner must have been living together as defined in section 1101 of the Income Tax Act 2007.

(ii) The additional allowance subscription must be made to an ISA, re-wrapped in the name of the surviving spouse/civil partner. The re-wrapped ISA must be managed by the account manager who managed the deceased's account. However, the regulations (at 5DDA(7)) provide that HMRC can authorise another account manager to accept a subscription from the surviving spouse/civil partner. The relevant part of the tax information and impact note (TIIN) reads as follows:

'In most cases, it is anticipated that the additional allowance should be used to subscribe to an ISA offered by the same financial institution that provided the deceased saver's ISA. An eligible individual may use this additional allowance by subscribing to an ISA they already hold, or by opening a new ISA.'

We understand that HMRC has stated that regulation 5DDA (7) '…provides for cases where a provider is unable to accept an additional permitted subscription, for instance because their book of business is closed. Where the manager is unable to accept a subscription they would need to refer to HMRC." The TIIN, to which HMRC has been referred, is thus perhaps not telling the whole story.

These regulations are in draft and it is to be hoped that the final version incorporates a little more flexibility on this point.

The subscription limit

The amount of the additional allowance subscription(s) cannot exceed the total value of all of the ISAs owned by the deceased at the date of their death.

The subscription rules

An additional allowance subscription can be made in cash or in specie (called non-cash assets).

(a) Cash subscription

In this situation, on death the ISA will come to an end (as it does currently) by the deceased's personal representatives taking the cash from a cash ISA, or arranging for the assets in a stocks and shares ISA to be liquidated or assigned to a beneficiary of the deceased's estate.

Once this occurs the surviving spouse can make an additional subscription up to an amount not exceeding the value of the deceased's ISA(s) at the date of death. The surviving spouse can make this additional subscription irrespective of who inherits the proceeds of the ISA. For example, the whole of the deceased's estate could pass to a charity but because the deceased's ISA has terminated their spouse can make an additional allowance subscription within the permitted time limits - see below. A subscription may also be made when there is an in specie subscription (see b) below) and the value of the non-cash assets at subscription is less than their value at death.

(b) In specie subscription

For an ordinary subscription to an ISA to count it must be in cash subject to one exception for shares awarded under certain share option schemes. In contrast, an additional allowance subscription can be in cash or in specie (called "non-cash assets").

Where the amount subscribed is made up of non-cash assets then the following conditions apply:

(i) The non-cash assets subscribed were in an ISA held by the deceased at death;

(ii) The non-cash assets subscribed were inherited by the surviving spouse/civil partner from the deceased; and

(iii) The non-cash assets at the point of subscription remain in the ownership of the account manager ie the non-cash assets have remained in the deceased's ISA and have not been transferred out to the surviving spouse/civil partner.


The non-cash assets that can fund an additional allowance subscription are those investments that qualify for inclusion in a stocks and shares component apart from cash; and the following assets which qualify for inclusion in a cash component

a) Certain securities issued under the National Loans Act 1968
b) A depositary interest
c) A short-term money market fund as defined
d) A money market fund as defined

When a non-cash asset subscription is made the amount of the subscription is equal to the value of the asset at the date of subscription. Because of this rule, the net result is that an in specie transfer will never be a simple movement of holdings from old to new ISA, unless the value at the date of death is matched by the value at the date of the survivor's subscription:

  • If values rise after death, then some of the former ISA holdings effectively become non-transferable (in ISA terms);
  • If values fall between death and subscription it will be possible for the survivor to make a full in specie transfer and a top-up cash subscription.

Just to complicate matters further, HMRC has confirmed that there is no change in the tax treatment of ISAs following death. Thus post-death income and gains will be taxable on the estate, even though for an in specie transfer it is a requirement of the regulations that "immediately before that [survivor's] subscription, title to those assets is vested, and has continuously since the deceased's death been vested, in the account manager or his nominee or jointly in one of them and another."

Income arising from the deceased's ISA, eg dividends, will not be transferable, although it may be possible to use it to fund a top up subscription if investment values fall post-death.

The "permitted" period

A subscription funded by non-cash assets must be made within a period which runs for 180 days from the date those non-cash assets were distributed to the surviving spouse/civil partner by the deceased's personal representatives.

Any other subscription - which basically means cash - must be made within 3 years from the deceased's date of death or within the 180 day period following completion of the administration of the deceased's estate if this date is later.

In connection with "any other subscription", if the deceased died on or after 3 December 2014 but before 6 April 2015 they will be treated as dying on 6 April 2015 for the purposes of the "3 year rule".

Making an additional subscription

An individual who wishes to make an additional subscription will be required to provide certain information and give certain declarations to the provider as follows:-

  • Information
    • the deceased's full name;
    • the deceased's full permanent address at the date of death;
    • the deceased's NINO, or confirmation they did not have one;
    • the deceased's date of birth and death; and
    • evidence that the individual making the additional subscription was the spouse or civil partner of the deceased.
  • Declaration
    An additional allowance subscription will not count as an additional subscription which counts against the surviving spouse's/civil partner's provided satisfactory declaration are given by the surviving spouse/civil partner as follows:-
    • he or she is the surviving spouse/civil partner of the deceased and that the couple were living together at the time of the deceased's death;
    • the subscription is an additional permitted subscription; and
    • the subscription is being made within the permitted time limits (see above).


Government launches campaign promoting will-making and powers of attorney

The Ministry of Justice has recently launched a public awareness campaign to encourage people to plan for their and their families' futures by ensuring they have wills and lasting powers of attorney (LPAs) in place.

The 'Choice not Chance' campaign consists of a campaign page on the Government website with links to further information on wills and LPAs; as well as a series of posters featuring emotive images and straplines intended to encourage people to think about, and talk about, what might happen in the event of their death, or if they lose mental capacity and need somebody to make decisions for them. The posters, one of which hints at the possibility of sustaining a head/brain injury while playing contact sports, are targeted at the 25-50 age group, who are often less inclined to think about these issues as they do not think they are relevant to them.

The 'Choice not Chance' campaign should encourage a greater number of younger people to make a will, create a lasting power of attorney and talk to their parents about doing the same. The campaign is also a welcome reminder for advisers that LPAs are not just for the elderly - accidents can strike at any time and the age group at which the campaign is aimed often have young families dependent on them, as well other responsibilities to consider, such as mortgages, which would still need to be repaid in the event that they became incapacitated.


Case confirms financial contribution not necessary for property share

(AF1, AF4, RO2, RO3, CF2)

In the recent Court of Appeal case of Graham-York v York, 2015 EWCA Civ 72, the claimant cohabitee was awarded a 25% beneficial interest in a property solely owned by her partner on the basis of her 'domestic contributions' even though her financial contribution was insignificant. The facts of the case were as follows.

Miss Graham-York and her partner, Mr York, lived together between 1976 and Mr York's death in 2009. The property in question was purchased by Mr York with the benefit of a mortgage taken out by Mr York. After Mr York's death, mortgage arrears developed and the mortgage lender obtained an order for possession. This order was challenged by Miss Graham-York who argued that she had a 50% beneficial interest in the home which was held in her deceased partner's sole name and which was worth over £1.2 million.

At trial, the County Court determined that Miss Graham-York did have a beneficial interest in the property but that it was limited to 25% of its value. Miss Graham-York appealed this decision to the Court of Appeal arguing that she was entitled to 50% of the value.

What emerged from evidence was that throughout their relationship, Mr York had assumed sole responsibility for the management of the family and household expenditure and that the financial contributions from Miss Graham-York were extremely limited. Miss Graham-York argued that although her direct financial contributions may not have amounted to much, it was only fair for her to have an equal share of the property given the length of her co-habitation with Mr York (33 years) and the contribution that she had made by bringing up their daughter.

Observing that the focus must be on valuing the actual contributions, both financial and non-financial, without being 'led astray' by the length of the co-habitation, the Court determined that Miss Graham-York's contribution boiled down to two key elements: the fact that she had played a primary role in looking after their daughter, and the fact that she cooked the family meals.

The Court ruled that these two elements justified a valuation of her interest in the property at 25%.

The Court's ruling has been criticised by some as being overly generous given that this was a case where the cohabitee's financial contributions were virtually non-existent. However, this case demonstrates that the Court will look closely at the extent of an individual's non-financial contributions in such situations.


Non-resident trusts - HMRC guidance

(AF1, RO3, JO2)

HMRC has added a new chapter on non-resident trusts to its Trusts, Settlements and Estates Manual (TSEM).The new section gives guidance on whether a trust is non-resident, and what to do when a non-resident trust is first set up. It also explains the tax consequences for trustees, settlors and beneficiaries. The new section can be found here.

There is also more detail than the previous guidance on trusts with a foreign connection, see here. compared with the old guidance which has now been archived.

Advisers may wish to consider reviewing the new section and the changes to the sections in relation to 'Trusts with a foreign connection' to ensure any of the details they rely upon when advising in this area haven't altered.


Investment planning

Barclays Capital Equity Gilt Study 2015

(AF4, RO2, CF2)

The 60th edition of the Equity Gilt Study from Barclays Capital was published at the end of last month, coincidentally in the same week as the FTSE 100 at last overtook its 1999 peak. The study, which incorporates UK investment data going back to 1899 and US data from 1925, is used extensively by investment analysts, financial journalists and fund marketing departments to provide statistics about long-term equity investment.

A summary table of real (ie net of inflation) annual gross returns to the end of 2014 is shown below:


1 Year

5 Years

10 Years

20 Years

50 Years

UK Equities






UK Gilts






UK Index-linked Gilts












Barclays Capital does not include commercial property in its survey, but the corresponding figures based on the latest available Investment Property Databank (IPD) statistics would be 1 year: 15.9%, 5 years; 7.2%; 10 years: 3.1% and 20 years: 5.7%.

Like its predecessors, the 2015 study contains a range of essays examining topical investment issues. This year's set includes:

  • Population dynamics and the (soon-to-be-disappearing) global 'savings glut' Barclays argues that the world is "on the cusp of a demographic inflection point." It thinks an ageing global population means that, with a few exceptions such as India and Brazil, saving has peaked and the pressure to realise accumulated investments will grow. This is "likely to generate a strong secular headwind for asset prices in the coming decades."
  • Adjusting to a world of lower oil Barclays' research and modelling lead it to believe "that lower oil prices are likely to persist." Demand growth will be slowed by energy efficiency and weaker global growth. On the supply side, Barclays says that US tight oil (aka shale/fracking) will keep OPEC in check.
  • Emerging markets is still an attractive asset class Despite recent difficulties, Barclays thinks that emerging markets (EM) economies are in a better condition now than a decade ago. Looking at EM in the context of a global portfolio, Barclays consider the gap between equity risk premia for emerging and developed markets "is significant", prompting it to suggest that "allocations to EM assets make sense even if asset returns are likely to be much lower than in the boom years."
  • The decline in financial market liquidity Barclays echoes the comments of several others on the subject of market liquidity. It notes that while tighter regulations have improved the financial system's stability, it has also reduced the supply of safe, short-term, liquid assets and created a drop in the liquidity of the fixed income markets. In turn this has driven investors "to look to non-traditional sources of liquidity, such as ETFs and mutual funds." While these fundsappearliquid, Barclays - like many others - is concerned that liquidity in the underlying investments of these funds could deteriorate, "exposing end-investors to run risk."

The stand out line from the latest data is that for the 20 year period from the end of 1994 to the end of 2014, gilts outperformed UK equities by 0.5% a year in real terms. The corresponding figure for last year had equities 2.0% a year ahead. The turnaround is largely due to the consequences of the 1994 performance dropping out (gilts underperformed equities by 12.2%) of the calculation and being replaced by 2014 performance (gilts outperformed equities by 16.8%). However, regardless of the mathematical quirk, a 5.1% real return from gilts over two decades does underline the extent of the bull market in government debt.



Net receipt from an UFPLS

(AF3, RO4, CF4, JO5, FA2)

This considers the practical implications of how PAYE operates on the payment of an uncrystallised funds pension lump sum (UFPLS) and how that will impact upon the actual amount an individual initially receives, compared with the final amount owing to (or by) HMRC.

The HMRC Newsletter 67 looks at the instances where the scheme has to operate a PAYE tax code on a month 1 basis. It is the manner in which the "month 1" code collects income tax that will result in a potential over payment of income tax, which the individual will then need to reclaim from HMRC.

We will consider a couple of examples to demonstrate the potential problems. It is important to note that we have shown these calculations to two decimal places. The actual PAYE tax tables will actually be rounded so the actual results with differ slightly, but these example will convey the potential issues:

Example 1

Andrew aged 59, is made redundant at the end of October 2015 (i.e. in the 2015/16 tax year) and supplies his personal pension plan (PPP) provider his P45, which shows a tax code of 1080L (the normal personal allowance of £10,600 plus £200 of professional subscriptions) with gross income to date (7 months) of £21,000 and PAYE deducted of £2,940.

In February 2016, he is finding it difficult to obtain new employment and decides to take a £20,000 gross UFPLS from his PPP which is paid in February 2016.

As per Scenario 1 of Newsletter 67 the PPP administrator will operate the tax code 1080L on a month 1 basis the PAYE deducted on the UFPLS will suffer PAYE of £5,190.25 leaving a net amount of £14,809.40. The income tax liability is broken down as follows:

Gross payment




Tax-free PCLS


£  5,000


Subject to PAYE









Tax-free pay (1/12th of the PA)




Taxed at 20% (1/12th of the 20% band; £2,648.75)




Taxed at 40% (1/12th of the 40% band; £9,851)




Taxed at 45% (on the excess)


£ 720.00


Total tax deducted




Net received




However, we need to consider the position at the end of the year:

  • The PAYE deducted on his salary will have amounted to £2,940.00, plus the £5,190.25 deducted from the UFPLS, a total of £8,130.25.
  • Andrew's total taxable earned income amounts to £36,000. Of this he has to pay 20% income tax on £25,200 amounting to £5,040.

The total tax deducted



Total tax due



Refund due



Example 2

Brian aged 61, is working part-time on a salary of £12,000 p.a. In addition he has £3,000 of savings interest, however he pays no income tax on this as it is covered by the 0% £5,000 starting rate. In October 2015, he decides to draw a £12,000 gross UFPLS to allow him to buy a new car.

As per Scenario 2 of Newsletter 66 the PPP administrator will operate the emergency tax code 1060L on a month 1 basis, the PAYE deducted on the UFPLS will suffer PAYE of £2,716.92 leaving a net amount of £9,283.08. The income tax liability is broken down as follows:

Gross payment




Tax-free PCLS




Subject to PAYE








Tax-free pay (1/12th of the PA)




Taxed at 20% (1/12th of the 20% band; £2,648)




Taxed at 40% (1/12th of the 40% band; £9,851)




Total tax deducted




Net received




However, we need to consider the position at the end of the year:

  • The PAYE deducted on his salary will have amounted to £280, plus the £2,716.92 deducted from the UFPLS, a total of £2,996.92.
  • Brian's total taxable earned income amounts to £21,000. Of this he has to pay 20% income tax on £10,400 amounting to £2,080.
  • However, his £3,000 of savings interest will no longer sit within the starting rate band, as that has been filled by earnings and pension income. As a result he will have a further liability of £600 on the interest, bringing his total tax bill to £2,680.

The total tax deducted



Total tax due



Refund due



Thus the £9,000 of taxable income from the UFPLS had added £2,400 (£2,680 - £280) to Brian's tax bill, an effective rate of 26.67%, even though he remains a basic rate taxpayer.

Planning point

As can be seen from both HMRC Newsletter, where the UFPLS doesn't extinguish all the funds in the pension, HMRC will issue the scheme administrator the appropriate tax code to operate against future payment made in that tax year.

It would seem to make sense, if the client is happy to do so, to take three or four small UFPLS payments rather than one larger one. If the second and subsequent payments are delayed until after HMRC issue the appropriate coding notice, it may mean there is a small over payment of income tax, which will help the client's cash-flow. However, it may well be the provider charges would mean this is not a viable course of action.


As can be seen from the above two examples, when a client takes an UFPLS it is likely to result in there being an over payment of income tax as even relatively small lump sums will push a client into the 40% or even 45% tax rate.

Clearly, HMRC would rather end up owing individuals income tax back at the end of the year, rather than having to wait for the individual to complete a self-assessment tax return to pay the outstanding liability, especially as many of these individuals will never have had to fill in a tax form before.

Another point worth mentioning is that, it is not correct to say the UFPLS will be taxed at the individual's marginal rates of tax. As it is deemed to be earned income it is the first tranche of income tax, so for some clients the pension income will be taxed at basic rates and their investment income is taxed at higher rate income tax.


Repatriating a QROPS to the UK

(AF3, RO4, CF4, JO5, FA2)

This considers the high level considerations where, in the past, an individual had transferred their benefits in a UK Registered Pension Scheme into a QROPS. Now that they are UK resident, whether because they have returned to the UK, or they never actually left in the first palace, they are wondering is it better to take benefits under the QROPS or to transfer the benefits in the QROPS back into a UK Registered Pension Scheme prior to commencing receipt of the benefits.


There are a number of important considerations that need to be factored in to the advice process. These are listed below. However, as this is a complex area it is difficult to be very specific. The following are some of the factors that need to be taken into account and an adviser will need to ensure they fully understand how they impact upon the circumstances of a particular individual client:

  • There will be no hard and fast rules over the way in which benefits can be paid from a QROPS; much will depend upon the jurisdiction in which it is based. However, having said that, many schemes will pay benefits broadly similar to those available under a UK Registered Pension Scheme. So, for instance, we are aware that some QROPS prior to 6 April 2015 were offering Flexible Drawdown and so we see no reason why they would there be willing to offer flexi-access drawdown from 6 April 2015.
  • Changes made under the Taxations of Pension Act 2014 introduce the pension flexibility rules. This may apply equally to non UK schemes as well as to UK registered pension schemes. This means that it is possible for the non-UK pension scheme to provide benefits that will be taxed to a UK resident in a similar manner to a UK registered pension scheme. The foreign pension income will benefit from the 10% foreign income deduction, meaning that only 90% of the income will be taxable, although there may be some withholding tax in the jurisdiction in which it is based.
  • An argument has been put forward by some, that the 25% lump sum paid from a non-UK pension scheme is liable to income tax. This is because whilst in Part 9 Chapter 15A ITEPA 2003, "Lump Sums Under Registered Pension Schemes" there is a specific exemption to income tax in respect of a PCLS paid from a UK Registered Pension Scheme, there is no equivalent in respect of non-UK pension schemes. However, others argue that the wording of Part 9 Chapter 4 "Foreign Pensions: General Rules" means that income tax is only levied on pension income arising from a non-UK pension, and therefore it follows the lump sum are not subject to UK income tax. There is also an argument, based on the Danner case, that if the QROPS is based in an EU Member State it will be difficult for HMRC to apply income tax on a benefit that that is tax-free in the other EU State and would also be tax-free if it were help in a UK registered pension scheme.
  • When transferring a QROPS to another pension scheme, a FCA regulated adviser would also, depending on the client's needs and circumstances, need to consider transferring to a different QROPS and not just a UK Registered Pension Scheme. It may well be that the client's current QROPS doesn't offer the flexibility that is desired. However, that flexibility might be delivered from a QROPS based in another jurisdiction and not just a UK registered pension scheme. We would therefore expect the resulting transfer report to be considerably more complex than for a simple transfer between two UK schemes.
  • An examination should be undertaken as to the reasons for transferring to the QROPS in the first place. It may well be that the original advice relating to the transfer to the QROPS was not appropriate. If that is the case, this should be addressed before any further action is taken.
  • An adviser will also need to ensure that the advice area in which they are dealing is one that they are suitably qualified in, whether this is down to their PI insurers or their own internal compliance structure.
  • QROPS based in the Channel Islands, Gibraltar or the Isle of Man are in jurisdictions which use Sterling as their currency, are part of the UK banks clearing system, and are either in the EU (Gibraltar) or outside of the EU (Channel Islands and the Isle of Man). A decision will need to be taken as to whether a QROPS based inside or outside of the EU is in the best interests of the client.
  • Where an individual transferred a UK registered pension scheme to a QROPS, it will have been assessed against the individual's LTA under BCE 8. If the individual decides to transfer back to the UK, it is possible that he will qualify for the international enhancement. Whether or not this is the case will depend upon the specific circumstances of the individual. Please refer to RPSM13100040 et al for more details of this. It would not be a good outcome if, following a transfer back into the UK, the individual was unable to replace the element of the LTA that was utilised on the original BCE 8.
  • If the QROPS contains the original transfer value plus growth, then the excess over the monetary value transferred out is not part of the funds on which the QROPS has to report to HMRC. So, if the QROPS is transferred back, there is an argument to retain the excess over the transfer value outside of the UK.
  • If funds are repatriated, and then crystallised, remember there is the potential, depending upon how benefits are crystallised, for another test against the LTA on death or on attaining age 75. This would not be the case if the funds remained in a QROPS. RPSM13104020 confirms that the benefit payment from the QROPS (out of the transferred funds) is not a benefit crystallisation event for the purpose of the lifetime allowance.
  • Broadly speaking the IHT position is similar for all qualifying non-UK pension schemes (QNUPS) (see The Inheritance (Qualifying Non-UK Pension Schemes) Regulations SI 2010/51) as for a UK registered pension scheme. In particular for lump sum death benefits to be free of IHT, they must be paid out of the QROPS within 2 years of the date of the member's death or 2 years of the date the scheme administration could reasonably have known of the death. All QROPS will be QNUPS, but not all QNUPS will be QROPS.

Many advisers are still recommending a client transfers to a QROPS as a means of mitigating the reduction in the LTA. For some people that will be appropriate advice, equally it will be appropriate for some individuals to consider repatriating pension to the UK. Remember the tax rules, and in particular pensions, seem to be the target for politicians or all persuasions and so just because the UK is an attractive case for pension funds now, doesn't mean that will always be the case.

Whether an adviser is recommending a transfer out or, or into, the UK it is important that the adviser fully understands all of the implications, based both upon the UK rules, the rules in the QROPS jurisdiction and the interaction between the two.

Pensions Schemes Act 2015

(AF3, RO4, CF4, JO5, FA2)

After its first reading in the Commons on 26 June 2014, the Pensions Scheme Bill 2014-15 received Royal Assent on 4 March to become the Pensions Schemes Act 2015.

According to the Minister for Pensions Steve Webb said:

  • The passing of this act marks the culmination of a 5-year pensions' revolution under this coalition government.
  • While for years successive governments simply watched the slow decline of the final salary scheme, we have responded by giving firms new ways of providing their staff with secure pensions.
  • There is a real appetite from employers to offer high-quality pensions for their staff and the new Defined Ambition pensions made possible by this act will enable a new generation of better, fairer schemes.
  • The act also protects the new pension freedoms and flexibilities, so people have control of their pension pots, and know it is a criminal offence for scammers to pretend to offer official Pension Wise guidance.

The landmark legislation passed today will create the opportunity for workers to save into Defined Ambition and Collective Benefit schemes:

  • The former of these will offer them a promise about some of the benefits they will receive, whilst the latter
  • Will be able to pool risks between the members and this can provide greater stability and already operate successfully in other European countries.

It is yet to be seen the appetite amongst employers and to a lesser extend employees attracted by the pensions freedoms, will have for these new types of pension structure.

The new Act also provides further protection measures for pension savers taking advantage of new flexibilities to access their pension pots from this April, including important new legislation on the new guidance service, Pension Wise.

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.


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