Alternatively Secured Pensions

What are Alternatively Secured Pensions?

Alternatively Secured Pensions (ASP's) are invested pension arrangements where income is being received by the member after the age of 75. An ASP is a form of Income Drawdown. Instead of purchasing an annuity at age 75, it is now possible to keep your pension invested and draw an income directly from the fund within government prescribed limits. The income limits are set between a minimum income of 55% and a maximum income of 90% of rates set by the Government Actuary's Department, which is based on the income which a 75 year old could obtain from a single life, level annuity. These income levels are reviewed annually, taking into account the size of the fund and always based on the income which could be taken in the form of an annuity by a 75 year old. Additional information on GAD rates can be obtained from the Reveues website.

• Death benefits under ASP are much less generous than under Drawdown, with effective tax charges of up to 82%. The personal representatives of the deceased ASP member's estate will be held liable for this liability.
• It is possible to transfer from one ASP to another, if you are not happy with your existing ASP arrangement.
• You can also annuitise your ASP arrangement at any point.
• Inheritance tax is not chargeable on any ASP funds paid to a spouse or dependant (which would include children under the age of 23) as retirement income or where the benefits are paid to a registered charity.
• When ASP is reviewed annually, the 12 month period is known as "alternatively secured pension years". The last such year is the year in which the member dies and ends immediately before death.
• The income from an Alternatively Secured Pension is taxed under Pay As You Earn rules on the taxable income which falls due in the tax year.
• If the income payment from an Alternatively Secured Pension falls short of the minimum, then the scheme administrator will be subject to a scheme sanction charge at the full rate of 40 percent on the amount of the shortfall (which can be deducted from the scheme).
• Protected Rights pensions can be included in an Alternatively Secured Pension arrangement, but "Safeguarded Rights" which are protected rights funds which have been the subject of a Pension Sharing Order following divorce/ dissolution of a civil partnership, must buy an annuity at age 75 and cannot go into an Alternatively Secured Pension.