Income draw down rates reduce from April 2011

HMRC has released the new GAD Tables for 2011 which see the maximum income reduce from 120% to 100% in addition the tables create a lower income at certain ages.

Delay to pension income changes

The Government Actuary’s Department (GAD) may not be in a position to publish the revised tables of relevant annuity rates in time for the changes in April and in view of the delay, may state that the final cut off for when reference periods must use the new GAD tables will be the 5th June 2011. Providers may therefore be able to use the existing tables for reference periods starting before that date.

Unsecured Pension 5 yearly reviews – clarification from HMRC

Three Sixty LLP have received clarification from HMRC regarding the situation where a client in unsecured pension, requests a review now but their pension year does not commence until after 6th April 2011.
HMRC have confirmed that (as expected) although the request may have been made before 6th
April 2011, if the new reference period starts on or after 6th April 2011 then the new limits and rules will apply to the ongoing fund, i.e. three year cycle and 100% income limit.

"Fryer and Ors v HMRC" - tax on pension death benefits

The recent ruling in the case of “Fryer and Ors v HMRC” is another example of HMRC tightening the screw.

The case of “Fryer and Ors v HMRC” concerned an individual who deferred taking her pension benefits at the notional retirement age of 60 and died age 61. The lady in question had no need for the income at that time having sold her business.  

HMRC successfully contended that the deceased, by deferring pension benefits, had made a disposition for inheritance tax purposes and that the pension death benefits should be chargeable to inheritance tax.

Anyone who has deferred starting benefits from a UK pension may wish to reconsider their position. For those with pensions who have not reached retirement age it may be appropriate to extend the normal retirement age to 75 (assuming that no penalties apply).