Alternatively Secured Pensions

The Alternatively Secured Pension (ASP) was introduced as part of the simplification regime. The alternatively secured pension is only available from age 75 and is a form of Pension Fund Withdrawal (Income Drawdown). Instead of buying an annuity at age 75, an individual can continue to invest their pension savings and draw an income from their fund within laid down limits.

These plans work in a similar way to Pension Fund Withdrawal plans, (see section on Income Drawdown), but with the following differences:-

The maximum income is 90% of the appropriate GAD rate, based on an age of 75. The minimum that must be drawn as an income from the fund is 55% of an amount calculated by applying the funds available to a table produced by the Government Actuaries Department (GAD). The maximum is 90%. The GAD table is based on the level of single-life lifetime annuity rates for a person of the same sex and aged 75. No allowance is made in the annuity rate used for any level of annual pension increases.
Reviews to set the maximum income limit must be undertaken annually, but the annuity rate used must continue to be based on an age of 75, rather than a members actual age.
In any event, the client must take a minimum income of 65% of the appropriate GAD rate based on an age of 75.

These restrictions are designed to limit the possibility of exhausting a members pension funds before death. ASP payments may be guaranteed for up to 10 years.

Alternatively Secured pension plans are relatively complex and are not suitable for everyone, but they can for some individuals offer a flexible approach to retirement in later life, particularly if annuity purchase is not an attractive option (for whatever reason). Careful consideration must be given to an individual’s personal circumstances. We strongly recommend advice from us be sought if you are considering this option.