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IPAs are set to change the pensions industry


Final details of the government plans to revitalise the pensions industry and move toward stakeholder pensions have been released today in a treasury web posting.

Individual pension accounts (IPAs) similar to the American 401 (K) plans which have proved so popular, will allow the working public to invest in investment trusts and unit trusts under the auspices of a pension scheme. Inland Revenue and regulatory systems have so far prevented any meaningful contribution to the pensions industry from the unit trust and investment trust companies.

IPAs are due to be launched in April of next year, they are not intended to be stand-alone pensions but will be a new method of making contributions to a stakeholder pension. Integration of the tax regime for these types of schemes will be from April of next year. It is anticipated that contributions from individuals will be up to £3,600 per year regardless of earnings levels.

It is expected that unit trust and investment trust companies will be exempted from stamp duty reserve tax, which places a 0.5 per cent extra burden on share transactions. The move will make it simpler for pensions providers to offer unit trust investments as a part of a pension plan.

Portability of pension schemes is still seen as being important in the overall design, and IPAs are expected to be fully portable enabling the worker at to move their pension scheme as their personal circumstances change as they move between jobs.


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