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Eversheds welcomes UK pensions reform ‘surprises’

  • United Kingdom

    21-07-2014

    The UK Government has responded today to its consultation on the changes to the tax rules for DC pensions that were announced in the Budget earlier this year.

    Commenting on the Government’s response, Francois Barker, head of pensions at law firm Eversheds, says:

    "Much of the Government’s response is in line with industry expectations, but there are a few surprises. For a start, the response paves the way for us to see annuities that go down as well as up and for individuals to take a lump sum from an annuity. These product features will be new in the UK and they will create new opportunities for retirement product providers. Individuals may also be allowed to make use of this new flexibility under DB schemes without first having to transfer into a DC scheme. The Government is planning to consult on this and it will be intriguing to see how they propose to achieve it.

    “The industry had also been expecting complex anti-avoidance rules to prevent individuals taking advantage of the new flexibility by recycling their pension benefits to get more than 25% tax free cash. However, I am pleased to say that the Government has announced a more pragmatic solution, which we have been working with key industry bodies over the past few weeks to secure.”

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