I think we all knew it in our hearts, the newfound “freedom” of pensions (as announced by George Osborne in his Budget speech earlier this year) may not be quite as easy as the political grandstanding made out.
Such a major change to decades of legislative red-tape was always likely to open up new opportunities for tax avoidance for the more well-off in society. And even before next year’s changes have been cast into legislation, there are already noises being made about one such opportunity: http://goo.gl/B8VtA4
I suspect that the cost to HMRC of this particular wheeze will be so significant that it might result in possible caveats to restrict or limit this practice. If that’s not immediately possible, then it’s probable that other attacks on pension tax advantages may follow in the fairly near future instead.
This may be the first of many tweaks in the coming years to ensure that the unshackling of pensions does not have a massive negative impact on the Government coffers. The result may well be that pensions will not be “free” in the true sense of the word, rather more a case of being let out on parole with significant limitations that must still be observed.
Only time will tell. Yet it’s clear that the options for older workers and pensioners are fast becoming ever more diverse and complex. As a result, education, guidance, and advice for both groupings will become increasingly necessary in the new pensions world.
Best regards
Steve
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