Press comment: MPAA reduction consultation response | Old Mutual Wealth
Share
Print
Print Share

MPAA reduction consultation response

20/03/2017

If you’re covering the government’s response to the consultation on reducing the money purchase annual allowance, please see the following comment from Ian Browne, Retirement Planning Expert at Old Mutual Wealth. 

“The government’s response to the consultation on the money purchase annual allowance (MPAA) reduction acknowledges all the issues with the policy. However, they have determined to forge full steam ahead leaving us with another example of a policy that needed more time for careful thought. 

“There are other ways to minimise recycling and the government also acknowledged this in their response. However, they said to abandon the MPAA now and consider a new approach would require too many new processes and its simpler to just keep the MPAA. It seems they’ve decided to go down an easier route, even if it’s not the right one,  instead of taking time to properly consider alternative routes.

“Indeed, by confirming the MPAA, the government have held on to a proposal that is at odds with the current trends developing in the retirement market and the spirit of pension freedoms. The budget documents show revenue from pension withdrawals was £1.5 billion in 2015-16, substantially more than the £0.3 billion estimate. It’s hard to justify this further tinkering, which may inadvertently penalise individuals that want to continue funding pension contributions in their late 50s and beyond after they have flexibly accessed some money purchase income.

“The government also acknowledge that their estimate that only 3% of over 55s are likely to pay more than £4,000 next tax year is likely to be inaccurate. In our consultation response we pointed out our  Freedom of Information request revealed they are unable to identify the number of individuals both accessing and saving into their pension, so the Government’s assessment of the impact of the MPAA is a best guess estimate.

“The good news is there are lots of things people can do to plan ahead. Taking tax free cash, for example, will not trigger the £4,000 money purchase annual allowance. Nor will anyone already in drawdown before April 6 2015 see their annual allowance reduced, provided they remain within capped drawdown limits. They should also consider using other assets to fund income other than their pension fund.”

 

For more information contact

Kathleen GallagherOld Mutual Wealth023 8072 629307990 004932kathleen.gallagher@omwealth.com

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• Private Client Advisers to Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.