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Barnett Waddingham welcomes simpler approach to pension drawdown

Andrew Roberts, technical head of self-invested pensions at Barnett Waddingham, has welcomed the draft rules released today outlining the simpler approach that is being introduced to pension drawdown from next year. 

“The new rules broadly follow the proposals issued in July which were warmly received.  We now have the detail and generally it seems sensibly thought out.  For example, member declarations will be used for flexible drawdown and existing drawdown limits can continue until their next review.”

Speaking about the mixed opinions on the change in tax on death benefits, Roberts said:

“It’s disappointing that the tax rate on death before age 75 has increased from 35% to 55%, but in the overall context it is acceptable.  Most people would now expect to reach age 75 and so can now plan their finances in retirement knowing that there is one flat rate tax rate.  More crucially, the Government has provided an exemption from Inheritance Tax for those who don’t access benefits even where they are in ill-health.  This will be of great help to those approaching retirement who find out that they have terminal cancer, for example.”  

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