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Alternatively Secured Pension (ASP)


When you reach age 75, and have not bought a lifetime annuity, you can use any residual invested pension funds to purchase a lifetime annuity or enter into Alternatively Secured Pension (ASP). This operates in the same way as USP, but with some different rules: The rules which are relevant are:

  • The maximum income you can withdraw is about 70% of a level single-life lifetime annuity.
  • This limit must be reviewed every year.
  • Regardless of your actual age, the maximum income will be based on age 75.


The funds in ASP are invested in a similar way to a USP arrangement and are therefore subject to investment risk. You will be able to convert your alternatively secured pension into a lifetime annuity at any time. In the event of your death, while in ASP, any remaining invested fund value can be used to either:

  1. Provide a spouse, civil partner or dependant’s alternatively secured pension for someone over age 75.
  2. Provide a spouse, civil partner or dependant’s unsecured pension for someone under age 75, or
  3. Provide a pension annuity for a spouse, civil partner or dependant's, or
  4. Provide a charity lump sum death benefit, or
  5. Provide a transfer lump sum death benefit (where there is no surviving dependant's).
    Where unused funds are subsequently used for the benefit of a spouse, civil partner or financial Dependant, there will be no immediate charge to Inheritance Tax. However, if on the subsequent death of that person there are still unused funds remaining, those unused funds will be taxed for IHT as if they had formed part of the original pensioner’s estate on death.
    Depending on how the original unused funds are used by any spouse, civil partner or financial dependant, there could be a further tax charge imposed on the net remaining funds as well.
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