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.
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.
Covid-19 has created many challenges for DB schemes but, for those ready to transact in 2020, it may have created even more favourable market conditions for a buyout. The problem is that most schemes are not there yet. In this Briefing we look at what being “deal ready” actually means and what work it will involve.
Given the very company/scheme-specific impact of the Covid-19 pandemic, in this quarter’s Arena we simply show all the usual financial and investment analysis for what was a very turbulent first three months of 2020, plus a summary of key pension developments and Company pensions news over the quarter.
Unit 13A | Church Farm Business Park | Corston | Bath | BA2 9AP | Telephone: +44 (0) 1225 481450
Registered Address: 37 Great Pulteney Street, Bath BA2 4DA | Company Registered in England & Wales Company No. 07975135