The Isle of Man’s government yesterday passed legislation in its budget for 2018 that will allow pension funds held on the island to be accessed once policy holders turn 55 years of age.
The move, which has been widely leaked, follows similar liberalising pensions legislation that came into effect in the UK in April 2015.
In his speech to parliament on Tuesday, treasury minister Alfred Cannan said the reforms will allow people to “look after their own savings.”
The new law will also double the limit, to £100,000 net of tax free cash, for full access to a fund of up to £142,000. This also avoid any transfer fee.
Cannan explained: “I will introduce a new pension scheme which will allow full access after age 55 and which will accept transfers from current approved schemes for a 10% fee.
“This new scheme will allow full tax relief on contributions and will be taxed at the usual rate but will have a large tax-free lump sum of 40%,” the minister said.
The move, while anticipated, has failed to find widespread support among IFAs and the wider financial services industry in the Isle of Man. Speaking yesterday, Cannon was bullish in defence of his policy, saying: “Given the fees these companies and their directors receive for handling and managing billions of pounds of pension funds but let me be clear: this is not their money and they most certainly are not in a position to judge that people cannot be trusted with their own money.”