In the June Budget, it was announced that the requirement for a pension scheme member to take benefits (for the vast majority, via the purchase of an annuity) by no later than age 75 would be amended, with the trigger age becoming 77 years instead. Legislation to this effect was to be expected in the third, and final, of this year's Finance Acts.

So, as things stood, weathly scheme members would still continue to face the choices of annuity purchase, QROPing or ASPing, but before age 77 rather than age 75. For the very big majority, such choices would be irrelevant due to pension entitlements long since having been triggered to provide a capital and income in retirement.

But no more. With the issue this week of a consultation document on the topic, different and more far reaching proposals are now in the public domain. Responses to the consultation are to be submitted by 10 September.

The proposals being put forward are as follows:

• There will no longer be a requirement to purchase an annuity, whether at 75, 77, or any other age.

• The ASP regime will be abolished.

• Scheme members will be entitled, but not obliged, to drawdown an income from a scheme, within minimum and maximum parameters: the proposals in this regard are similar to those for SIPPS.

• The 25% income tax free lump sum entitlement will remain.

• The scheme value of a member who dies before age 75, and without having drawn benefits, will continue to be tax free.

• The scheme value of a member who dies when aged 75 plus, or at an earlier age when the scheme is in draw- down, will be subject to income tax. This recovery rate is proposed to be 55%.

• There will be no inheritance tax charged on the value of schemes.

Whilst it should be noted that these are only proposals, the changes, in whatever final form, are expected to take effect from April 2011.

What will, and will not, find its way into the draft legislation, due to be issued later this year, remains to be seen.  However, what will, to many, already be clear is that, whilst many of the sentiments expressed in the condoc are laudable when taken in isolation, the whole exercise is going to involve a huge amount of time and effort, further complicate a pensions system which the previous government managed both to introduce and trash in the space of only 5 short years, and stand to benefit only a very small number of pensioners.

And who will, in the main, make up that very small proportion ?  Those who have such a degree of wealth tthat they can use a pension as a tax favoured savings and estate planning vehicle because they will have sufficient means elsewhere not to have a need to draw on the pension as means of paying the bills. A cynic might suggest that is a small very wealthy group of people who might be  confused with those who the upper echelons of the new coalition government are so keen to cosy up to. ( Well, that, and a certain constituency who are too stupid to understand that their pensions are going to be too small to pay for the weekly grocery shop let alone represent a nest egg for their children.)

Whilst I would like to be proven wrong when it comes to the motivations behind these proposals, it is hard not to be sceptical, not when we have already put with up so much politically inspired bad law from the previous administration. 

But, if scepticsm is warranted, then, in practice, all these proposals will really mean is that a relatively small number of very wealthy people with old style uncapped pension schemes worth millions, if not tens of millions, are going to die with their schemes deliberately left untouched, and with their heirs getting a 33% cut (82% down to 55%) in the tax bill they would otherwise have suffered. For everyone else, with relatively low value schemes which will be drawn down or annuitised long before reaching age 75, the proposals will make scant difference.

Whatever, the shame here is that we are undoubtedly already facing a future pensions and savings crisis, with the great majority of those in the post baby-boomer generations facing an impoverished old age. The best the previous government could come up with is the idiocy of NEST. And, now, is this the best the new lot can manage ?  We can but hope there is more, to follow, that it is radical, and soon.