NEWSFLASH : PENSION TERM ASSURANCE CHANGES
2006 Pre Budget Report: Page 119 (section 5.77) has the following update:
'The Government has become aware that, as a result of the flexibilities that the new pensions tax regime has brought in, life insurance policies that provide lump sum death benefits alone are being offered as personal pension arrangements eligible for pensions tax relief. This undermines the principles set out above. The Government will therefore work with the pensions industry to explore in time for the budget; how the principles can be applied to pensions term assurance contracts. Any changes the Government decides to make will not effect either personal arrangements entered into before 6 December 2006 or existing types of employer arrangements.'
The above is part of a pre-budget report issued yesterday, and we are currently obtaining clarification from each provider, which will be posted on the site shortly.
Norwich Union have already confirmed:
Norwich Union Life - Life insurance with Tax Relief/ Mortgage Life insurance with Tax Relief statement.
“ Following the release of the Pre-Budget Report (PBR) yesterday Norwich Union will withdraw from new business for the current life insurance with tax relief products until further notice. Norwich Union will continue to seek clarification from the Treasury and HMRC on the implications of the PBR to existing, pipeline and future new business. In the meantime, Norwich Union will want to understand the position for those customers currently in the pipeline and will communicate this over the next few days.
Louise Colley, Head of Protection Marketing said: ‘ We are concerned at the lack of consultation which has led to confusion for providers, advisers and customers alike, and will be making representations to Ministers. We are now defining how we treat pipeline business, our aim being to minimise the impact on both customers and advisers. ”
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