Dick
Hale, CAPPA's Policy Co-ordinator represented us at the Financial Journalist
Group forum held in June 2002.
This
is the handout given to journalists for future reference.
About
the Organisation
We
were formed in November 1999 as a group of like minded people who wished
to draw attention to the fact that it was required that pensioners holding
pension investments who had not yet purchased an annuity would be forced
to do so on reaching age 75. Membership was sought only through personal
contact with friends and colleagues and now stands at about 1,600.
A
Typical CAPPA Member
The
average age of CAPPA members would be about 65, although recent recruiting
is pushing this figure lower as the 50-60 age group are becoming aware
of the situation. We have a number of members who are in their 74th year.
The majority of members are married with no other dependants.
The
average number of policies per member is about four, generated from varying
employment, with an average policy size about £ 30,000, making
the average fund size between £ 100K and £ 150K, plus some residual
pensions and existing annuities.
They
do not consider themselves "wealthy" as the annuitised value
of their funds is little above £ 12,000pa.
CAPPA's
Objective
All
that we ask is that having reached the age of 75, we be permitted to continue
with existing drawdown arrangements, and in return would accept that any
"unvested monies" must then be taken into drawdown or used for
annuity purchase in order that full tax liabilities would be applied on
death and in drawings..
Let
us also add what we do not wish to do.
We
do not
wish to scrap annuities in their present form, in fact annuities form
a part of many members' financial planning arrangements on reaching retirement.
We
are not seeking to increase the present level of tax-free cash allowance
presently allowed by the Government.
We
are not seeking to change the existing GAD limits, but would like if possible
to change the lower GAD limit in years where our fund shows lower than
anticipated growth to allow the fund value to recover.
We
are not seeking to change the present tax arrangements, namely:
*
That income from annuities/drawdown are taxed as income
*
That on death the residual fund may be passed to our spouse/dependants
as cash, only after payment of 35% tax (presumably advance income tax)
*That
if our spouse chooses to continue with drawdown, this would still be treated
as earned income for tax purposes, though we would like this to be extended
beyond 75.
*That
any unused pension benefits passed as cash to our Spouse would not only
be taxed at 35% on transfer, but that on death the residue should also
be liable for Inheritance Tax on death of the Spouse.
We
would accept that in order to continue with the freedom of drawdown beyond
75, some of the fund may have to be used to purchase an annuity to cover
the Minimum Income Guarantee, but not before 75.
In
short, we are currently permitted to manage withdrawals from our pensions
from age 50 to 75.
Present
legislation implies that on reaching 75, we are no longer capable of continuing
on this basis, and therefore must be "protected" by the Government,
protection that is not wanted.