Advanced Corporation Tax credits for pension funds, savings and charities in 1997,
The Pension Tax Calculator http://dev.brewin.co.uk/pensiontaxcalculator compares the anticipated value of an individual’s pension on retirement to what it would have been had the Government not changed abolished Advanced Corporation Tax credits for pensions, savings and charities in 1997.
The calculator also estimates the required increase in the level of contributions from today and the number of additional months to be worked in order to make up for the shortfall.
According to examples from Brewin Dolphin’s Pension Tax Calculator, a 40 year old man who is married with two children could end up having to work for an additional 22 months to make up his pensions deficit or increase his total contributions by 25 per cent from now on. A single mother in her late forties would have to work an additional 15 months or increase her net monthly contributions by 27 per cent in order to make up the difference.
Brewin Dolphin conducted some public research (TNS) in February of this year which showed that 41 per cent (19 million) of British adults had been unaware of the impact of this move on their pensions for the last ten years. The findings also showed that although 19 per cent of Britons were aware that the Chancellor had removed the tax credit, they had no idea of the impact on their pension fund. This means that 60 per cent of British people have made no revisions in their pension arrangements in the ten years since ACT credits were abolished.
Brewin Dolphin Securities director of corporate affairs Charlotte Black says: “Our Pension Tax Calculator clearly demonstrates that it was quite wrong for the Treasury to claim that the abolition of tax credits on pensions would have no impact on their savings. If it had been acknowledged at the time, investors would only have had to make a very small adjustment to their contributions to make up the shortfall. But ten years on the necessary increase is significant, which also clearly demonstrates the fact that the earlier you invest in pensions the better. We hope that our calculator will encourage people to take action.”