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Alternatively
Secured Pensions
The Alternatively Secured Pension (ASP) was
introduced as part of the simplification regime. The alternatively
secured pension is only available from age 75 and is a form of
Pension Fund Withdrawal (Income Drawdown). Instead of buying
an annuity at age 75, an individual can continue to invest their
pension savings and draw an income from their fund within laid
down limits.
These plans work in a similar way to Pension Fund Withdrawal
plans, (see section on Income Drawdown), but with the following
differences:-
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The maximum income is 90% of the appropriate GAD
rate, based on an age of 75. The minimum that must be drawn
as an income from the fund is 55% of an amount calculated
by applying the funds available to a table produced by the
Government Actuaries Department (GAD). The maximum is 90%.
The GAD table is based on the level of single-life lifetime
annuity rates for a person of the same sex and aged 75. No
allowance is made in the annuity rate used for any level
of annual pension increases. |
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Reviews to set the maximum income limit must be
undertaken annually, but the annuity rate used must continue
to be based on an age of 75, rather than a members actual
age. |
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In any event, the client must take a minimum income
of 65% of the appropriate GAD rate based on an age of 75. |
These restrictions are
designed to limit the possibility of exhausting a members pension
funds before death. ASP payments may be guaranteed for up to
10 years.
Alternatively Secured pension plans are relatively complex and
are not suitable for everyone, but they can for some individuals
offer a flexible approach to retirement in later life, particularly
if annuity purchase is not an attractive option (for whatever
reason). Careful consideration must be given to an individual’s
personal circumstances. We strongly recommend advice from us
be sought if you are considering this option.
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