UK employers call for pension tax simplification
Written by Jack Gray
Three quarters of employers believe that the current pension tax structure is too complicated and needs simplification, according to the Association of Consulting Actuaries (ACA).
As reported by our sister title, Pensions Age, the survey found that the majority wanted a simpler system, while 67 per cent said that more help should be targeted to lower earners, even if its at the expense of higher income groups.
Over two thirds (69 per cent) want the tapered annual allowance to be abolished, even if it resulted in the general annual allowance being reduced.
The number of employers that responded to the survey saying that current relief restrictions have caused senior or higher income employees to leave their pension schemes increased from 30 per cent last year to 44 per cent.
Furthermore, 21 per cent of employers said that skilled staff are retiring earlier or working fewer hours as a result of the tax system.
Commenting on the findings, ACA chair, Jenny Condron, said: “The findings in this our third report on our 2019 Pension Trends survey have underscored employers’ frustration with the damaging impact of the ‘tightening’ of pension tax reliefs in recent years through lower annual and lifetime allowances, and the complexity that this has introduced.
“There is widespread demand for reforms to simplify a tax regime that is now well past its sell-by date. It is clear that any reforms being considered by the Treasury must not be short-term tweaks for public sector employees only – reforms must be even handed and extend to resolving problems that impact on all wealth-generating sectors of our economy.
“However, it’s vital that changes are properly considered and, if at all possible, that there is some cross-party agreement on the political aims and the means by which they are delivered. Any major revisions to the regime must be robust and enduring, enabling employees to plan for long term pension saving.
“The present complexity results in some individuals being put off saving for retirement. Further, many key decision makers within businesses have opted out of involvement in their company pensions due to their individual pension tax positions.
“We see many employers deterred from establishing and maintaining pension schemes for their staff beyond the minimum required by auto-enrolment.”