TISA welcomes clarification on pension cancellation rights on Tax-Free Cash, but urges consideration of the impact on genuine savers
On Thursday, HMRC and the Financial Conduct Authority (FCA) issued co-ordinated statements clarifying the interaction between tax legislation and regulatory rules on tax free cash cancellation rights. In their statements, they confirmed that the cancellation rights for Tax Free Cash will not be allowed in any circumstance.
Renny Biggins, Head of Retirement at The Investing and Saving Alliance, said:
“A pension pot can often be an individual’s largest asset, and the decision to take Tax-Free Cash (TFC) is one of the most significant decisions they can make. The clarity from HMRC and the FCA regarding cancellation rights on TFC is welcomed and will enable firms to focus their communication strategies on ensuring consumers are fully aware of the irreversible nature of this decision.
Whilst we understand the need to prevent gaming of the system, we also urge the FCA and HMRC to consider the impact of such a hardline approach on savers. To not allow any reversal, even when circumstances change and withdrawal is retrospectively deemed an inappropriate action, seems unduly harsh and not in keeping with the goal of achieving fair outcomes for consumers.
We will continue to work with the FCA and HMRC and our members to ensure operational impacts are clarified and that consumers are effectively supported through what is one of the most important financial choices they are likely to ever make. It is crucial they are made clearly aware of the financial and tax ramifications of their actions.”
ENDS.
Notes to editor
- HMRC’s statement on tax-free cash cancellation rights can be found here, while the FCA’s can be found here.
- TISA is a not-for-profit membership organisation committed to improving the financial wellbeing of all UK consumers by working collectively with the financial services industry to deliver solutions and champion innovation, for the benefit of people, our industry, and the nation.
- TISA has approximately 270 member firms involved in the supply and distribution of savings and investment products and associated services. Members include the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, FinTechs, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.