Pensions - Articles - Allow ‘protected benefits’ access to full pension freedoms

 Steven Cameron, Regulatory Strategy Director at Aegon said:

 “We support the Government’s aim of offering everyone access to the new pension freedoms, including one group who we’ve identified as having a particularly difficult trade-off to make. Many tens of thousands of individuals who were members of pension schemes before April 2006 may have ‘protected benefits’ in older style contracts. This means they have an entitlement to tax free cash of more than 25% and/or a protected retirement age below age 55. These older style ’buyout’ contracts are very unlikely to be adapted to allow for the new freedoms, so to access the freedoms, individuals will need to transfer to a new pension contract. But current HMRC rules mean those in individual buyout contracts with protected benefits will lose them if they transfer to a new arrangement

  

 “For those with protected benefits, transfer decisions are particularly complex, involving weighing up the attractions of the pension freedoms versus the loss of higher tax free cash . This points to advice, but if funds are small, advice costs may be disproportionate.

  

 “As a demonstration of its commitment to offer everyone access to the freedoms, we’d like the Government to remove this barrier, allowing people to transfer to new contracts without losing what can be valuable protections.”