Week ending 24 July 2020
MPs on the Public Accounts Committee have published a report recommending a review of pensions tax relief and its impact within a year. They are concerned that different tax reliefs are not being evaluated to establish whether they are delivering what was intended. One issue for pensions tax relief is the 1.75 million low paid and part-time workers, earning less than the personal allowance, who are not benefitting from tax relief on their pension contributions. This is due to them having been auto-enrolled into schemes using the net pay method of tax relief.
On the same theme, the Treasury has now published the call for evidence on the administration of pensions tax relief which was announced in the March Budget. The Government is looking at the difference in tax relief obtained by low earners depending on the method of tax relief used by their employer’s pension scheme. The consultation is looking for ways to address this anomaly but says that a proportionate and straightforward solution has not been found. All the options considered have drawbacks and would increase complexity in the already complicated pensions tax regime. One option would be to require all DC schemes to operate relief at source. Suggestions for other possible solutions are requested. This consultation closes on 13 October 2020.
The Treasury has published draft tax legislation, which will form part of the Finance Bill 2020-21, that would allow Collective Defined Contribution schemes to operate as UK registered pension schemes with no adverse tax consequences from 6 April 2021.
KPMG is consulting on temporarily reducing its employer DC contributions, which could affect around 20% of its staff, due to the effects of the pandemic.
In the news this week, pensions tax relief is back in the spotlight, the Treasury publishes draft legislation for CDC schemes and a big 4 accountant looks to temporarily reduce its DC contributions.
In the news over the last week, the Pension Schemes Bill is at the final hurdle, automatic enrolment limits are reviewed, there is new research into trustee decision-making, the FCA sees signs of improvement in DB transfer advice and a full buy-in is completed.
This quarter’s Arena has a summary of our recent Pensions Perspective, “Endgame planning comes of age”, which looked at how long-term funding and investment plans are evolving and why companies are increasingly taking the lead in designing an endgame strategy. It also shows all the usual financial and investment analysis for the quarter ending 30 September 2020.
Journey plans or glide paths may have been around for a long time but they’re at the heart of the Regulator’s proposed new funding code. In this Pensions Perspective, Leonard Bowman looks at how long-term funding and investment plans are evolving and explains why companies are increasingly taking the lead in designing an endgame strategy for their schemes.
This quarter’s Arena has a summary of our recent Pensions Perspective, “Emerging from lockdown”, which looked at how best to tackle the most common pension issues which companies are currently facing. It also shows all the usual financial and investment analysis for the quarter ending 30 June 2020.
As we keep hearing, we are living in unprecedented times. However, as we turn our attention to the future, what does the “new normal” mean for defined benefit pension schemes? In this Pensions Perspective, Leonard Bowman considers the most common pension issues that companies are facing and how best to ensure that the company approaches these on the front foot.
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