With the change of minimum pension age from 50 to 55 an unintended consequence was that anyone who had commenced Unsecured Pension (USP) prior to 6th April 2010 aged between 50 and 55 would be subject to an Unauthorised Payment charge should they wish to transfer to another provider. Following pressure from industry representatives and after receiving further legal advice the HMRC confirmed that no such charges would apply. However, it continued to indicate that any income payments taken by the member from the receiving scheme before his 55th birthday would be taxed as unauthorised payments.
The Government has now indicated that they intend to bring forward legislation to amend these rules and to remove the unauthorised payment charge from income drawn between age 50 and 55 following transfer of a USP scheme.
The willingness of the HMRC to remove the unintended consequence of the change to minimum pension age is welcome and shows that they are becoming far less prescriptive and far more receptive to industry representation.