PAYE overhaul must not delay Nest
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Experts are warning that the National Employment Savings Trust rollout must not be hindered by Government plans to overhaul the pay as you earn tax system.
HM Revenue & Customs’ discussion paper on revamping PAYE closed last week. Plans put forward include a “radical” option of centralised deductions, where gross wages are sent directly to HMRC, which would calculate and deduct tax and benefits, rather than employers.
But Legal & General pensions strategy director Adrian Boulding warns that any PAYE overhaul must not impinge on auto-enrolment plans.
He says: “I would have tho-ught a new PAYE system incorporation would add three years to the start date of auto-enrolment. If we waited another three years for a wonderful new PAYE system we would lose too much time. We must press on and go with what we have.”
Standard Life head of policy John Lawson says the timescale on the overhaul means that a new PAYE system will have to fit in with the Nest system.
He says: “The existing PAYE system is a mess but because it would have to be rebuilt from scratch it would not be ready to implement until well after 2015. The switchover will have to happen after auto-enrolment arrives.”
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Readers' comments (2)
Julian Stevens | 23 Sep 2010 6:39 pm
And the investment management end of NEST?? What about the extra 2% AMC to recoup the millions so far frittered away by PADA? And there'll be no margin for the cost of advice.
It shouldn't be too hard for any half decent life office to come up with a demonstrably better and lower cost private sector offering.
So far, it all seems to be a prize mess and we're not even out of the starting gate. But then what can you expect of a scheme designed by the public sector for the private sector?
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Anonymous | 24 Sep 2010 10:49 am
It has already been published and proven that a private sector scheme with a flat Annual Management Charge of 0.55% has the same effect as the proposed charging structure of NEST but with out penalising those who are on low incomes and in and out of work regularly in the same way that a 2% initial charge does! I thought that the days of B/O spreads on pension contracts had gone when the government introduced Stakeholder so why are tunring the clock back and trying to replace it with an inferior product that has no margin for advice, limited investment choice and restricted transfer rules? What a complete waste of time and money! by all means implement the compulsory aspect of the Act but why do we need a NEW pension product when we already have a "low cost, flexible" one which is tried and tested and needs no money spent on it by the insurers to use. Its ready now!
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