Pension limit restrictions are increasing client demand for venture capital trusts (VCTs) rising over the next tax year, research from Albion Ventures has suggested (lifetime allowance).

Many VCTs have already seen high inflows of money through the advised sector well ahead of the end of the current tax year, which Will Fraser Allen, deputy managing partner at Albion Ventures, explained is as a direct result of the pension reforms.

In its poll of 101 IFAs conducted in February, 84 per cent said they were advising their clients on the danger breaching the reduced pension lifetime allowance limit and, of these, 31 per cent are anticipating that some of their clients exceeding it this tax year.

Advisers estimated that 11 per cent of clients will exceed the £1m lifetime pension limit by retirement age. This rose to 16 per cent among clients in their 40s, who are likely to be making contributions to their pensions over a further 20 years.

Mr Fraser-Allen said: “Clients are increasingly aware of the need to look beyond their pension and diversify their investments across a range of tax-efficient products to fund their retirement.

(FTAdviser, Feb 2016)

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