View more on these topics

2012 Tax shock for protected pensions

First Actuarial has warned that people with enhanced protection on their pension savings could trigger penal tax charges by being auto-enrolled into personal accounts.

The firm is calling on the Government to change the rules so that saving in a personal account does not affect enhanced protection, which protects people from a 55 per cent tax charge if they go over their lifetime allowance.

Savers who have registered for enhanced protection will see it invalidated by being auto-enrolled as it will be classed as a new pension contribution.

Director Alan Smith says: “In 2012, people with enhanced protection who are still working will be auto-enrolled into personal accounts and unless they act quickly and opt out they will lose this protection and benefits valued over the lifetime allowance will be taxed at 55 per cent.

“The resulting tax bill could potentially run to tens of thousands of pounds.”

Informed Choice director Martin Bamford says: “It is definitely a risk, particularly because a lot of people will have registered for enhanced protection a long time ago and forgotten about it. It is good this is being flagged up. Hopefully, the Government will exempt this.”

Recommended

Seeing the potential

Moving 1,800 users of a critical software system at the same time is a gargantuan task. This is what True Potential achieved for Positive Solutions over the Christmas period.

Stay away from precipice

It may have escaped your notice that while sales of unit trusts have been sluggish, there is one area that is positively booming – structured products.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com