Pensions Update: Finance Act 2017

In our recent blog we mentioned some potentially significant changes introduced in November’s Finance Bill regarding unvested PRSAs. 

The proposed amendments provided that benefits not taken by PRSA contributors on or before their 75th birthday will be treated as having been vested on that date with the consequences that brings (see below).  Furthermore, the individual’s 75th birthday will be a Benefit Crystallisation Event (BCE) for the purpose of determining any liability to excess fund tax.

The final version of the legislation has modified the position further.  

First of all, it extended the new rules to RAC contracts. Second, it has brought in transitional rules for individuals who are over age 75 and have an unvested RAC/PRSA. They now at least have until 31 March 2017 to access these arrangements under the normal retirement options. 

After that date, the following rules will now apply: 

•    The PRSA will be subject to the imputed distribution and will, on death, be treated like an Approved Retirement Fund (ARF), but after 31 March 2017 the individual will have no access to the assets in the PRSA during their lifetime. 

•    A vested RAC will be subject to the ARF rules on death, but after 31 March 2017 the individual will have no access to assets in the RAC during their lifetime.

RAC/PRSA holders who will be 75 after 31 March 2017 will need to consider drawing their benefits on or before age 75 as a result of the new provisions. 

Because of the deadline of 31 March 2017, it is critical that anybody who could be affected by the changes gets professional advice and takes appropriate action.   

If you have any questions on this blog or could be affected by the issues raised, please contact us on 01 661 1022 or by email justask@independent-trustee.com 

*Please note this content is the view of the author and not of Independent Trustee Company


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