AXA launches IHT aware pension option

by Gill Montia

Story link: AXA launches IHT aware pension option

AXA Wealth Management is introducing a new scheme that will allow pension funds to be held in trust for up to 80 years following the death of an investor.

The new option will enable pension assets to form part of a person’s estate while at the same time reducing risk and liability for Inheritance Tax (IHT).

The discretionary trust option will be available on a range of pensions including stakeholder, personal pension and self-invested pension wrappers, or Sipps.

Tony Moore, head of retirement development at AXA Wealth, believes that: “People want to see the benefits of saving hard for their own financial security, without having to worry about IHT liability on their death prior to vesting.”

Meanwhile the Financial Services Authority (FSA) has issued a report in which it states that “the persistency for personal pensions continues to fall”.

The FSA found that 42.3% of clients with independent financial advisers kept their personal pensions after four years, compared to 45.9% in 2006 and over 70% in 1998.

According to Scottish Life the FSA’s research proves the pension industry will experience substantial losses if people continue to fail to make contributions and the company believes that the industry cannot continue with the pricing pension plan methods being currently used.

In October of this year, Scottish Widows reported that 35% of women have no pension fund, compared to 22% of men.