How new Isle of Man pension freedoms differ starkly from the UK
By Mark Battersby, 23 Feb 18
The Isle of Man budget on 20 February introduced the concept of pension freedoms to the island’s pensions legislation, setting out some stark differences to the already established UK rules.
The numbers
The UK has a triviality limit of £30k. The recent budget has raised the Isle of Man figure to £100k after the payment of tax free cash, which at 30% means that an individual with a pension fund of £142k can now enjoy full pension access.
In the Isle of Man budget announcement, reference was made to a 10% access charge when transferring into fully flexible pensions from existing pension schemes.
This may have been a compromise to pension providers who lobbied against the proposed changes, reportedly due to concerns over the impact on ongoing management charges. 10% is a significant charge and is in stark contrast to the climate in the UK, which is very much focused on driving down charges to consumers.
This charge will be alleviated to a certain extent by the benign tax climate in the Isle of Man. One of the stand out features of the new rule is the ability to access up to 40% of the fund tax free. Add to this the fact that the maximum income tax rate in the Isle of Man is 20% and it is evident that an individual in the Isle of Man who is fully accessing their pension would have a much better net result than an individual accessing a similar fund in the UK.
Tags: David White | Isle Of Man | Pension Freedoms | QB Partners | UK Adviser
