Sipp specialist: Money purchase scheme pensions losing out

A specialist Sipp and SSAS firm believes those with money purchase scheme pensions will be losing out under the retirement revolution. Talbot and Muir said over recent years scheme pensions within a Sipp or SSAS have been used by many to gain increased levels of income based on personal circumstances, rather than just using maximum GAD rates at the time.Claire Trott, head of technical support at Talbot and Muir, said those with money purchase scheme pensions have been disadvantaged by the pension reforms, which are set to take effect in April.She said: "For those in a money purchase scheme pension who thought they were doing the right thing at the time, because they could afford to take increased income from their pension pot under the scheme pension rules, will now not be able to use the pension reforms which would have given them greater pension freedoms."{desktop}{/desktop}{mobile}{/mobile}The death benefit changes available to those in drawdown, where they can nominate any beneficiary, has not been extended to scheme pension death benefits.Ms Trott said it was unclear if guarantee periods under a scheme pension would be treated the same as those under an annuity.The final legislation is awaited on the treatment of joint life annuities and guaranteed payments and until this is seen, it remains unclear, she said.Lump sum death benefits are covered under the new lump sum rules.But Ms Trott said this doesn't help those clients wanting to either access all or more of their fund now or those that wish to leave income to future generations, possibly tax free.Ms Trott added: "A change in legislation could see many people in scheme pensions opt to change their retirement strategies and use flexi-access drawdown."A consultation on annuity resale should be extended to cover the options surrounding money purchase scheme pensions which may see many disadvantaged by these changes."

Sipp specialist: Money purchase scheme pensions losing out

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