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Heed UK pension freedoms lessons

Cautious approach to avoid pitfalls - PFS

The Isle of Man has been urged to consider the UK's experience before offering its citizens full pensions freedom.   

Since 2015, anyone over the age of 55 in the UK has been allowed to take their whole pension as a lump sum, with no requirement to buy an annuity - a money purchase scheme offering monthly income for life. 

The regime was extended to those with defined contribution schemes, and meant they paid no tax on the first 25% with the rest subject to income tax, as if it were a salary. 

Already however, several restrictions have been applied, amid fears cashed-in pension pots were being spent too quickly.

In the lsle of Man, the Department of Economic Development has consulted with the finance sector over the impact allowing absolute freedom would have on the Manx pensions industry.

A working group recommended limited relaxation of the rules, and in the 2016 Budget, the treasury minister announced those with £70,000 or less in their schemes would be allowed full access.

The CEO of the Personal Finance Society Keith Richards, suggests the authorities should consider the UK's experience in detail, before going any further.

Mr Richards gave the keynote speech to Island PFS members at a professional development gathering last week.

He said the Island should heed lessons learned elsewhere: 

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