Bell put his suggestions to the Financial Secretary to the Treasury, Sajid Javid MP, in an open letter where Bell echoed Prince Charles’ call for a pension regime ‘fit for the 21st century’.
The Government is urged to consider the following seven proposals:
Use the annual allowance as the primary control on pension tax reliefs and remove the lifetime allowance and the associated, complex protection regimes.
Move to a simple percentage-based regime where an annual income allowance is based on the saver’s age, thus providing savers with increased certainty of their likely maximum income based on their pension fund value.
Scrap flexible drawdown and introduce a straightforward, more accessible requirement enabling savers to withdraw 10% p.a. of any pension savings in excess of £200,000 irrespective of their age.
Re-introduce a simple list of permitted investments for SIPPs containing all mainstream quoted investments, UK-regulated collective investment schemes and commercial property. This will help to address the number of failing investments made through SIPPs and provide investors with greater protection.
Apply a single rate of tax of 35% to lump sum death benefits on both uncrystallised and crystallised lump sums. This will remove the current 55% cliff-edge and reduce the incentive to use QROPS and tax-avoidance schemes which attract investors with significant pension funds.
Allow a saver’s tax-free lump sum to be drawn early but only by people aged 45 and over. This will help to protect families lured by pension liberation fraudsters in times of financial difficulty to gain early access to pension savings in breach of the current rules.
Change the current system to allow lump sums to be paid to savers who have already crystallised their pension fund. This will allow funds to be made available to an individual with less than 12 months left to live to support their needs in their final months.
Bell commented, “I am more convinced than ever that change is needed to the current system. Without a fundamental review, the system will fail to engage many pension savers due to its complexity and lack of flexibility".
Bell continued, “Our proposals have the objective of bringing pensions into the 21st century and building a system that is simpler, more sustainable and will give people the confidence to commit to long term saving.”
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