Pension fund members warned over tax

Thu, 16 Mar 2006

Financial services company Standard Life is urging members of pension funds that are in excess of £1 million to consider the tax implications of retirement.

The firm has written to such pension fund members to explain to them the possibility of incurring what it deems as being unnecessary tax charges at retirement.

Under new rules for the UK pension system that will come into effect on A-Day, April 6th 2006, any funds over the lifetime allowance of £1.5 million could be subject to tax of up to 55 per cent, the bank says.

This lifetime allowance charge could run into hundreds of thousands of pounds, Standard Life warns.

However, it adds that protection against this charge is available in the form of transitional protection.

In order to qualify for this, pension fund members need to register with HM Revenue & Customs, according to Standard Life.

"We would hope that anyone with a large pension fund has already sought advice on protecting themselves against the lifetime allowance charge," comments Margaret Craig, the bank's customer communications manager.

"Protection of pension assets after A-Day is an extremely complex matter and missing out or getting it wrong could be a very expensive mistake."

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