22 December 2006
HM Treasury and HM Revenue and Customs have issued a statement
on Pensions Term Assurance pipeline cases.
Following the announcement on the review of Pensions Term
Assurance contained in section 5.77 of the Pre Budget Report, the
Treasury and HMRC have been engaged in discussions with insurance
industry representatives on a number of issues.
As part of these discussions the industry has asked for some
specific and immediate guidance regarding those customers in the
'pipeline' - those who had applied for a policy on or before the
6th December, but where the policy has yet to be issued. The
statement issued by HMT and HMRC is intended to provide that
guidance on this particular topic in advance of the more general
consultation that the Pre Budget Report proposes.
Statement issued by HMT/HMRC:
"Those customers who have applied for policies on or before the
6th December will be treated in the same way as those whose
policies have already been issued - they will continue to benefit
from tax relief, and will be unaffected by the announcement in the
Pre Budget Report, with the conditions below.
"In response to requests from the insurance industry we
recognise that there will be some customers whose application was
not received by the insurance company on or before the 6th
December, even though it had been completed by the customer and
submitted, possibly via an advisor, to the insurance company on or
after that date.
"Therefore in all cases where an application applying for life
insurance cover, has been fully completed on or before 6th
December, submitted to the insurance company and receipt recorded
by that insurance company by midnight on 13th December 2006 the
existing tax relief regime will apply, provided that the "sum
assured" issued is no greater than that applied for on or before
6th December 2006. Treatment of increases will be considered as
part of the wider consultation. Insurers will have until 5 April
2007 to process this business, so that appropriate medical evidence
can be checked and an appropriate commencement date for cover
settled.
"For the avoidance of doubt applying for life insurance cover
does not include merely applying for a quotation with no other
commitment.
"This announcement is intended to ensure customers, their
advisers and insurers benefit from clarity and certainty on this
key issue in advance of the broader consultation into the future of
pensions term assurance. We will be engaging further with the
industry on the broader issue of the future of pensions term
assurance over the coming weeks as part of the wider
consultation."
