Alliance Trust Savings, one of the country's leading SIPP providers has predicted a surge in advised flexible drawdown business as a result of the 2011 Finance Bill gaining Royal Assent.
Flexible drawdown allows clients to take unlimited income from their pension as long as they are in receipt of a minimum secured pension income of at least £20,000 per annum known as the minimum income requirement (MIR).
Individuals have been able to move into flexible drawdown since 6 April this year but many advisers have chosen to delay advising clients to move into flexible drawdown fearing a last minute rule change that could have applied tax charges retrospectively to their clients. A number of providers decided not to offer a flexible drawdown product or service from 6 April 2011. Alliance Trust Savings has offered flexible drawdown on both their Select and Full SIPP products since 6 April 2011, as part of its commitment to offering clients maximum flexibility.
Steve Latto, Head of Pensions at Alliance Trust Savings commented:
"Conversations with advisers have revealed that many have been awaiting approval of the Finance Bill before offering advice on flexible drawdown. Alliance Trust Savings has seen a recent increase in the number of advisers speaking to our business development managers about producing flexible drawdown quotes.
"We expect that the market will see two surges in flexible drawdown business with the first following Royal Assent of the Finance Bill.. The second spike is likely to come in the early part of the next tax year and will come from individuals who have made a pension contribution in the current tax year which prohibits them from moving into flexible drawdown until the next tax year."
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