The Pensions Green Paper proposes the most radical shake-up to tax and
other rules governing pensions for many years and will affect the advice
you should be giving immediately.
On February 6, Taxbriefs is holding a Sofa-sponsored conference in London
on the ramifications of the review.
Speakers will include Secretary of State for Work and Pensions Andrew Smith
and the leader of the Inland Revenue's Pension simplification review team
Money Marketing is teaming up with Taxbriefs to let you make your views
known before the conference by answering questions we are publishing over
the next few weeks.
The Green Paper and supporting documents run to over 300 pages and contain
a wide range of proposals which could radically change the pension
landscape. For example, under the Inland Revenue's proposals:
One universal tax regime will replace all existing regimes (eight,
according to the Revenue) with the same rules applying to a final-salary
scheme and a retirement annuity. Existing benefits would be protected under
A maximum tax-exempt fund for all pension investments of £1.4m
would be established. This is roughly equivalent to the current cost of
providing maximum occupational scheme benefits for a 60-year-old
occupational scheme member subject to the earnings' cap. Any surplus over
the £1.4m would be subject to a “recovery charge” of 33.3 per cent and
would then have to provide taxable income – an effective total tax rate of
up to 60 per cent. The fund limit would be indexed.
The maximum total pension contribution in any one year would be
£200,000, of which the member could contribute up to 100 per cent of
earnings (or £3,600, if greater). For final-salary schemes, the
“contribution” would be calculated as the increase in the value of
benefits. Excess contributions would be taxable as income via the
The Department for Work and Pensions ideas include:
No change to the state pension age. The DWP dismisses suggestions,
such as those from the NAPF and IPPR, that the SPA should increase to 70.
No changes to S2P or pension credit, although the self-employed may
be allowed to join S2P on a voluntary basis.
The pension conference will be held on February 6 at The London Goodenough
Trust, Mecklenburgh Square, London. Tickets are £435 plus VAT
(£350 plus VAT for additional delegates), by contacting Taxbriefs on
020 7250 0967 or sending an email to email@example.com.
The Green Paper raises many issues on which your views should be heard so
that they can be conveyed to the Inland Revenue and DWP as part of the
consultation process. This week, you have the opportunity to put your views
on the following aspects of the pension proposals:
1: Is the Inland Revenue proposal to replace all the existing tax regimes
with a single new regime practical and desirable?
2: Are the limits of £1.4m and £200,000 about right?
3: What practical difficulties might arise from setting a limit to the size
of each person's retirement fund and level of annual contributions?
4: The Inland Revenue says the new rules will allow it to scrap carryback
of contributions. Would this cause any problems?
5: The Inland Revenue has pencilled in April 6, 2004 as a start date for
the new tax regime. Would you like to see a different timescale?
6: How would your ability to advise lowto middle-income groups be affected
by the maintenance of the existing structure of state pensions and pension
Please send your responses to Taxbriefs, 2-5 Benjamin Street, London EC1M
5QL or by email to:firstname.lastname@example.org.
To download the Green Paper documentation go to: