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 […]

The Pensions Regulator warns half a million small employers to avoid fines
A warning has been sent by The Pensions Regulator (TPR) to half a million small employers of their risk of being fined for not taking action on their workplace pension obligations. The Department for Work and Pensions’ (DWP) ‘Workie’ character, who first made an appearance on our screens in October last year, returns and emphasises […]
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Simon Collins: FCA tightens grip on value for money
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Industry failing to nudge people to consider pensions options
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