A new flexible pension scheme has already proven popular.

Laws were updated last year - on a temporary basis - to allow pension providers to offer a scheme in which a hold could opt for a lump sum payment of the entire sum after reaching 55, with up to 40% tax-free, or opt for a lump sum of up to 40% of the full amount and arrange for further payments at specified times.

The Income Tax Legislation (Amendment) Bill, which has just completed its passage through the House of Keys, puts that temporary law onto a permanent footing.

Treasury Minister Alfred Cannan said: ’This scheme is already proving popular and I hope these changes will make it easier to operate, and more attractive.’

The new law goes further than the temporary rules.

Mr Cannan said: ’The changes make it possible to have more than one of the new flexible pension schemes.

’They will allow pension payments to be made to a spouse or dependent on the death of a member and will also allow for a more flexible way to draw down the pension.’

MHKs voted unanimously to grant the bill a third reading. It will now be passed on to the Legislative Council for further scrutiny.