Home > News > 2011 > December 2011 > Malcolm McLean comments on Governments intention to extend the trivial pensions rules
Malcolm McLean comments on Governments intention to extend the trivial pensions rules
Commenting on the Government’s recent announcement of its intention to extend the trivial pensions rules to cover small personal pension pots, Barnett Waddingham consultant, Malcolm McLean, said:
“Currently people can take a pension pot as cash after they reach age 60 if the total value of all their pension savings does not exceed £18,000 with a secondary option for members of an occupational pension scheme to take individual pots of up to £2,000 as cash. Until now, however, this secondary option has not extended to personal pension pots – presumably to avoid the possibility of any manipulation of the rules by carving up larger pots into a series of smaller pots and benefitting from multiple encashments - but where arguably at the other end of the scale the biggest problem lies. It has meant that someone with say a small to medium size occupational pension with a value approaching or higher than £18,000 has been unable to cash in a very small personal pension which in itself is too small for it to be used to purchase an annuity leaving the plan holder stuck with little or no option as to how to proceed. A truly ridiculous position to be in.
“Draft legislation was published on 6 December 2011 and it appears it will have retrospective effect from that date. On a similar basis to small occupational pension holdings it will allow individuals aged 60 or over with small pension pots of £2,000 or less to cash them in subject to a maximum of two such pots in their lifetime.
“This is the sort of pragmatic arrangement which many of us have been calling for over a number of years and is one which could and should have been introduced much earlier. Better late than never, however, and the present Government is to be commended for bringing it in now.”
For more information please contact Malcolm McLean or Steph Gold