The rules on drawing income withdrawal after age 75 (called an ‘Alternatively Secured Pension’) are much stricter than before age 75 (called an ‘Unsecured pension’).
Our 'ASP' Fact Sheet explains the rules in more detail. The main restrictions are:
- The maximum income is likely to go down.
- There is a requirement to draw a minimum income (with tax consequences if not drawn).
- This maximum and minimum is reviewed at 75 and every birthday thereafter (with this review done on the assumption the member is still age 75).
- On death, if the member is survived by a spouse / dependant the funds must be used to provide them with a pension benefit.
- On death where the member is not survived by a spouse / dependant the funds must be paid to a charity that they can nominate. No lump sum can be paid.
- If the above death rules are not followed the tax consequences are severe (on aggregate up to a 82% tax rate).
- If funds are not distributed on death quickly (within 6 months of the end of the month of death) the funds will be counted towards their estate for Inheritance Tax purposes.
We strongly recommend a member takes independent professional advice before going into ASP.
Our 'ASP' Fact Sheet explains what happens where a spouse / dependant goes into income withdrawal when they subsequently die.