View more on these topics

Flat-rate S2P and axe for contracting out

The Government has ignored pleas not to move to a flat-rate second state pension and to keep the option of contracting out.

The S2P changes mean many thousands of people could be hit by what is being widely seen as a stealth tax on middle-income-earners. The Tories say Labour is bringing in another tax on the back of reform.

There are around 20 million employees paying into the state second pension through National Insurance contributions. The changes proposed mean these employees will have to pay thousands of pounds a year to the taxman for a benefit they will no longer receive.

Contracting out for DC schemes would be abolished when the basic state pension is linked with earnings, while DB contracting out will be phased out by 2030. The S2P will become a flat-rate top-up on the BSP by around 2030.

Aegon UK head of corporate affairs Francis McGee says: “We are disappointed in the move to a flat-rate second state pension and the abolition of contracting out for defined-contribution schemes which increases the Government’s unfunded pension liabilities.”

Recommended

A&L fixes exit fees as FSA action looms

Alliance & Leicester has fixed its exit fees, raising hopes that the rest of the market will follow suit to stave off regulatory action. The firm says it will not raise the exit fee during a customer’s term and has capped its redemption fee at 295. The move follows a similar decision by Northern Rock […]

Tax-free cash clouds pension vision

The glaring absence of tax-free cash in the Government’s vision for a pension savings scheme could prove the saving grace for advisers or signal the Government’s intent to scrap tax-free cash altogether. Hargreaves Lansdown head of pensions research Tom McPhail says it would be difficult for a savings scheme to be attractive if the private […]

Charlie Eppinger

Cofunds’ chief executive believes the key to success in the turbulent investment platform market over the next decade will be to offer the ability to aggregate products.

Wraps to put price pressure on bonds

Investment bond charges will fall as a result of competition in the wrap market, according to research firm Defaqto. The consultancy argues that wraps will bring downward pressure on bond charges because most wraps have clean structures. This is because they do not generally support indemnity commission and because advisers set charges. It says the […]

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