Mortgage Industry News

← Back

A-day could mean life insurance changes

Date: Thu, 06 Apr 2006

The arrival of A-Day has raised concerns within the pension industry that many people could lose out on enhanced protection of life insurance cover.

The new legislation could make it difficult for pension schemes that include life insurance cover to retain enhanced levels of protection.

Such measures have in the past enabled individuals to protect all of their savings from the post-simplification lifetime allowance charge. This means that some homeowners have been able to avoid a tax of up to 55 per cent on any excess assets left to relatives after their death.

However, the new Finance Act only allows such protection to remain under the existing policy; if members chose a new insurance provider then they would lose the entitlement.

Chris Bellers, pensions technical manager at Friends Provident, speaking to Reuters, explained this could be particular crucial for workers changing employers.

"What happens if you change companies and they provide you with the same benefits and what happens if you increase life cover on an existing policy?," said Mr Bellers.


© 1998-2005 DeHavilland Information Services plc. All rights reserved.

Endsleigh Insurance Services Limited is authorised and regulated by the Financial Services Authority. This can be checked on the FSA Register by visiting its web site at www.fsa.gov.uk/register.
Endsleigh Insurance Services Limited. Company No: 856706 registered in England at Shurdington Road, Cheltenham Spa, Gloucestershire GL51 4UE.