View more on these topics

FAS pensioners will get higher rate tax break

Work and Pensions Secretary James Purnell has today confirmed that anyone getting a payment via the Financial Assistance Scheme will not necessarily have to pay higher rate tax.

Those pensioners receiving £40,000 or less a year – which is the majority of the members – will not move into the higher tax bracket.

Payments via the FAS will not be viewed as a single payment for the year in which they are paid.

Instead they will be allocated to the year, or years, in which the original pension payment should have been received by the individual.

The announcement follows the decision to extend FAS to levels comparable to the Pension Protection Fund in December 2007 and give early assistance to those members who had to stop work early due to ill health.

The legislation will come into force in May and will mean those people receiving a payment to cover a past period to either May 14 2004 or their scheme’s retirement age will pay no more tax than they would have done if the payments had been made over the relevant years.

Purnell says: “It’s not fair that people who have saved hard into their personal pension and had the misfortune of losing it through no fault of their own, should be taxed at a higher rate.

“Today’s announcement gives the confidence people need to know that they won’t automatically be brought into a higher tax band simply through getting their Financial Assistance Scheme payments as a lump sum.”

Pensions consultant Dr Ros Altmann says: “This is really good news, but of course it will be essential to get the detail right. The arrears should not be added to any earnings that the victims had during the past few years, because they were only working as a result of not having received their pensions.

“The important principle is that members want to know they won’t be penalised – tax-wise – for having had to work during the past few years when they should have been living on their pensions.”


Mouse trap

A few weeks ago, after one of those industry seminars which you find yourself attending for some mysterious reason and then wonder why you bothered, an IFA asked me what criteria I use to decide what topic to write about this column.

New Star ties with Emirates NDB Group for property launch

New Star and Emirates NDB Group have announced the launch of the Emirates Islamic global property fund.The fund will be managed by Enterprise Investment Services, the asset management arm of the Emirates NDB Group, and will be regulated by the Dubai Financial Services Authority.The Shari’a compliant fund will focus on Continental European and Asian direct […]

Northern Rock to slash mortgage book by 60%

Northern Rock has revealed plans to offload 60 per cent of its mortgage book at it looks to break even by 2011.The bank says it will encourage borrowers to remortgage elsewhere after their mortgage terms expire, with the aim of reducing its balance sheet from £107bn to around £50bn.It will limit its share of gross […]

Fidelity Intl admits jobs at threat as CBI warns of industry shake-out

Fidelity International is set to cut 100 jobs from its UK operation in a bid to tackle ongoing market volatility, Money Marketing understands.The group has confirmed that a review is under way, with several back-office functions already believed to have been moved to India.Fidelity International has a worldwide workforce of 5,000, excluding the US arm […]

Pensions - thumbnail

Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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