Pensions Term Assurance has died a death in the Chancellor’s Budget despite only being available since April last year as it is clear that the tax relief was costing the Treasury too much.
The Government signalled a crackdown on PTA in the pre-budget report in December but suggested a lifeline might be available in a revised form. Instead, the Chancellor has banged the last nail in the coffin for this product.
The death of Pensions Term Assurance product is extremely unfortunate for those who have or wanted to quite reasonably switch over from ordinary life insurance to save themselves money.
Whilst this move was widely anticipated, it is disappointing for cash-strapped households who could be taking out tax-free life insurance.
Consumers and the insurance industry have been let down by the Chancellor. U-turns like this send out completely the wrong message to consumers about the need for protection. Insurers worked hard with the Treasury to get an acceptable product but in the end the Treasury said no to all sensible proposals. This is a severe blow for consumers who will no longer have any tax incentive to protect their families.
Stand-alone PTA only became possible last April, and all the time and money the industry has invested in building systems, supporting advisers and developing the product has been pointless. After less than a year a useful product has been destroyed solely by greed on the part of the Treasury.
Several insurers have made public statements on their serious disappointment and how badly they feel they have been let down by the Treasury. Others have made comments, but these are too rude to print on a public website.