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Scottish Life points IFAs to &#39overlooked&#39 DC strategy

Scottish Life claims that a largely unnoticed aspect of pension legislation which came into force last April 6 could present IFAs with good business opportunities.

Under the new defined-contribution regime, there is no differentiation between self-employed and employed earnings where employers wish to contribute to an employee&#39s personal or stakeholder pension scheme.

This means employers are allowed to consider both the salaried and self-employed earnings of an individual employee when paying a contribution to a group personal pension scheme. Previously, they were only allowed to consider employed earnings.

Scottish Life claims the change provides an opportunity for IFAs to talk to relevant clients and add real value.

It says the new rule is especially useful for a company director who also has Schedule D consultancy earnings, as employer contributions can be claimed as a deduction for tax purposes in the company&#39s accounts.

Head of communications Alasdair Buchanan says: “With major changes to the rules last year, it has been difficult for advisers to look at every detailed change. This rule appears to have been overlooked by many but it can be very useful when advising clients who have both employed and self-employed earnings.”

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