Pension term assurance
From Wikipedia, the free encyclopedia
Pension Term Assurance (PTA) is a form of life insurance available within the U.K.
On 6th December 2006 the Government announced an important review of Pension Term Assurance (PTA). In a short but vital paragraph the Treasury has effectively thrown the PTA market into turmoil as it has indicated it is not happy with the current products on offer. PTA hasn’t been withdrawn at this stage, however the Government has stated that there will be some significant changes in the 2007 Budget.
Read more at the HM Revenue and customs website: [1]
The following information was correct before the statement was made.
Although PTA has been available for several years, it only became mainstream when changes were made to pension legislation on "A Day", 6th April, 2006.
Despite what the name might suggest, Pension Term Assurance does not have to form part of a pension, but it could, in theory, lead to savings of between 5% and 15% on life insurance for a standard rate tax payer, and up to 30% for higher rate tax payers.
This is because monthly premiums receive 22% tax relief for standard-rate tax payers (although pension term policies do cost a little more for the insurer to administer than normal life insurance policies, hence the overall saving will probably be between 5% - 15%).
Higher rate tax payers can also claim back the extra 18% in their annual tax return form.
