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&#39Rethink tax on pension credits&#39

Scottish Equitable is calling for the Government to offer a higher incentive to low-income savers by linking the pension credit to the basic tax rate.

In its response to the consultation on the proposed pension savings top-up, ScotEq claims the credits equate to a 40 per cent tax rate on the private pension income of low earners. This would mean the equivalent of higher-rate tax being applied to people who are likely to have paid only basic tax at 22 per cent during their working lives.

ScotEq believes the proposals are enough incentive for low earners to save for their retirement although it says the Government&#39s plans are a significant improvement on the present position.

The plan for pension credits was announced last year and is aimed at encouraging saving among low-earners after the minimum income guarantee has been taken into account.

The life office also says many in the stakeholder target group will be affected by the pension credit. It argues that if the plans are not changed it will be very difficult to encourage people to save in the period between the launch of stakeholder in April and the launch of the credits in 2003.

ScotEq pensions development manager Margaret Craig says: “We do not think the current proposals are an incentive to save. If people have been paying basic-rate tax all their lives, they may ask why they have to effectively pay higher rate tax in retirement. Also pension credits will have to be simple enough to be included in decision trees.”


Gordon&#39s and tonic with a twist

If you like driving tractors, swilling whisky, having a gamble and, erm, procreating, this was the Budget for you. In what was perhaps an attempt to atone for some of these unsavoury associations, Chancellor Gordon Brown also promised that repairs to churches would attract a reduced rate of VAT. Then came his pronouncements on the […]

CIVs to be sold through IFAs

The Chancellor has announced plans to launch a new community investment vehicle aimed at encouraging investment into Britain’s most deprived areas.There will also be range of enhancements to Venture Capital Trusts and Enterprise Investment Schemes, as well as an extension of the Film Tax Relief scheme.The new CIV is one of a number of possible […]

Norwich Union International launches 20 new funds

Norwich Union International, CGNU&#39s Dublin-based offshore life and investment arm, is launching 20 new funds this week.The new fund range includes three funds of funds – cautious, managed and growth – managed by Investment Manager Selection.The range also includes six socially responsible investment funds managed by Norwich Union&#39s SRI team.The 11 other new funds include […]

Widows won&#39t weaken brand with other stakes

Pension firms will not sell rivals&#39 stakeholder plans because it would weaken their own brand, says Scottish Widows. The only providers which will take advantage of phase one of the relaxation of polarisation are smaller companies that do not have their own stakeholder product, said Widows pensions strategy manager Ian Naismith. Because of this limited […]

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In Focus — February 2015

Jelf Employee Benefits looks at the issue of paying anaesthetist fees when the patient had no chance to discuss or agree to them prior to care; and provides recommendations for avoiding this scenario.


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