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Release date: 20 February 2008
Tax relief
Changes to the tax rules this year means that, with immediate effect, PTA policies will lose tax relief if, for any reason whatsoever, you either:
- miss a payment; or
- do not make a payment by the premium due date.
For most PTAs (those issued after 30 June 1988), a missed or late payment means the policy will lapse, and the life cover will be lost. It will not be possible to re-instate the life cover.
The main exception to this is RAC policies (issued before 1 July 1988). Whilst a late or missed payment will result in a policy lapsing, and the consequent loss of life cover, we will consider re-instating that life cover and accepting further premiums, but those premiums would not be eligible for tax relief.
Please note it will not be possible to effect a new pension term assurance policy with any of the subsidiary companies of Pearl Group Ltd should existing contracts lapse.
What is Pension Term Assurance?
A Pension Term Assurance (PTA) is a life assurance policy issued under pension scheme rules to provide life cover.
A PTA may have been issued as a stand-alone policy, where all of your premiums are used to fund the life cover, or it may be part of a pension plan, where some of your premiums (contributions) are used for life cover and the remainder is invested for your retirement. A PTA pays out on your death within the term of the policy. It will not give you an income in retirement.
You may be paying for life cover within, or alongside, your existing Personal Pension Plan, Free Standing Additional Voluntary Contribution Plan or Retirement Annuity Contract (RAC), although it may not specifically be referred to as Pension Term Assurance.
Policies with pension life cover that started before 1 August 2007 are entitled to tax relief at your highest marginal rate on the premiums paid.
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