LV= discusses AA retirement calculator issue

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LV= discusses AA retirement calculator issue

Wed 12th Jan 2011

The government's proposals to take cash from people's pension funds if they exceed their annual allowance (AA) has been criticised by a source from LV=.

Retirement solutions director at the firm John Perks explained that the plan is for people to pay the first £2,000 to £6,000 from their own income.

But he suggested this system could mean consumer's pension pots are "raided" if they exceed the threshold by only a small amount.

Mr Perks said: "We believe the proposal in its current form contains a number of weaknesses and is too complex."

In his opinion, the nature of defined-contribution schemes means individuals signed up to such products are unlikely to accrue sufficient benefits so as to prompt an AA charge, which means the tax burden could fall on other people's finances.

Last month, head of pensions at LV= Ray Chinn praised the government for its strategy on unsecured pensions and annuity purchases, saying it had adopted a "fairer approach".

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