Retiring in good health

How new pension fund rules could increase life expectancy

With the news that the tax charge on pension funds will be removed before age 75, some commentators have suggested that over 90% of people retiring in good health should expect to live beyond age 75. For someone with moderate levels of health issues, over 80% might expect to live to at least 75. The tax landscape beyond age 75 is different, with tax being paid on monies passed on.

Great headlines
On the face of it, these changes are good news for savers with defined contribution pensions and creates great headlines. But the reality is that the vast majority of people retiring with good health should expect to live beyond age 75. So the chances of people passing on tax-free lump sums are slim.

Unscrupulous practices
There is also the need to tread with care around the unscrupulous practices that will no doubt appear encouraging transfers between defined benefit pensions and defined contribution pensions, in an attempt to sell the benefits of tax-free access to the estate on death. Hopefully the Autumn Statement will bring clarity to this area.