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Pension cap could turn away savers

Mounting a defence of people with pension pots likely to exceed £1.4m in the court of public opinion is not an easy task.

These well-off and presumably dedicated savers stand to lose from the Pensions Green Paper but there is an escalating row over how many of them there are.

The Treasury is wedded to its original assertion that it will catch only 5,000 personal pension savers. Pension consultants, IFAs and most pension providers put the number closer to 100,000.

This is not the only dispute. Standard Life argues that if the Revenue pursues plans to tie this limit to prices rather than earnings then between 5 and 10 per cent of the population will have to change their retirement planning to avoid the £1.4m limit. The tax hit above this level is a punitive 60 per cent.

The argument is not only whether £1.4m represents a reasonable cut-off point but also whether it is reasonable for the Revenue to take an increasing amount of money from those retiring over time.

Few would argue that the Government is correct to concentrate on helping the less well off. At the other end of the earnings&#39 scale, the public perception that fat cats are creaming off an unfair share of pension cash is probably accurate. But perhaps this only affects the top executives.

We have always argued that taxation is the Government&#39s business and ultimately that of the electorate. But if Standard is correct, the Government risks alienating the UK&#39s managerial and professional classes from the pension system.

Other countries have successfully offered incentives to executives through their own pensions to encourage their workforces to save. It would be a shame if this reform did the reverse.


Legal & General – Protected Index Plan 2

Tuesday, 18 March 2003 Type: Guaranteed equity bond Aim: Growth linked to the performance of the FTSE 100 index Minimum-maximum investment: £1,000-no maximum, £7,000 Isa Term: Five years six months Guarantee: Capital returned in full regardless of the performance in the index Return: 100% of any growth up to 55% Closing date: April 25, 2003 […]

Self Trade offers portfolio service for IFAs

E-broker Self Trade is rolling out a dealing service allowing IFAs to manage their clients&#39 stock portfolios through a comprehensive execution-only share system.Currently only available to online banks, including Cahoot, the service allows advisers to deal online, access clients&#39 trading histories and calculate fees. It will be aimed at fee-based IFAs with high-net-worth clients later […]

NU sets out plan to &#39nationalise&#39 private health

Norwich Union Healthcare is trying to build an industrywide consensus for its proposed healthcare model, which would see the NHS compete as an insurer with the private sector by offering consumers a core package of cover.Initially unveiled in September 2001, the stakeholder healthcare model would see individuals pay a separate premium for their healthcare, reflected […]

School of thought

What can be done to improve consumer understanding of the need for protection and who should be leading the drive?Armstrong: All players in the industry – providers and advisers – need to work together on this. Providers can help by making products and marketing material easier for consumers to understand. The Raising Standards Quality Mark […]

Global income: preparing for a rate rise…

In the five years since we launched the Artemis Global Income Fund, its manager Jacob de Tusch-Lec has built a distinctive portfolio that is first among its peers. Here he explains why his “quality, cyclical and value yield” stocks, and flexible approach, leave the fund better placed to benefit from uncertainty than funds that depend […]


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