Treasury to review tapered annual allowance
The Treasury has announced it will be reviewing tapered annual allowance in the light of the issues arising from NHS doctors’ pension contributions.
The Department of Health and Social Care (DHSC) is to open a new consultation asking for feedback on a new set of proposals, which includes giving senior clinicians full flexibility over the amount they put into their pension pots.
Starting from next financial year, the new rules would allow senior clinicians to set the exact level of pension accrual at the start of each year. For example 30% contributions for a 30% accrual rate, or any other percentage in 10% increments depending on their financial situation. This would give them room to take on additional work without breaching their annual allowance and facing tax charges. Employers would then have the option to recycle their unused contribution back into the clinician’s salary.
Steven Cameron, pensions director at Aegon, warned against other ‘special concessions’ hinted at in the announcement, such as exempting this group of NHS workers from tapered annual allowance.
He said: “These highly complex rules are affecting an increasing number of individuals across many employment sectors, public and private… If we start linking pensions tax allowances to a value judgement about the nature of people’s work, where might this take us?”
There was also a danger he said around “the message this consultation sends to wider society. While the issue is only affecting highly paid individuals, it risks sending out a damaging message about the benefits of pensions. People should be strongly encouraged to save what they can for retirement, and reading about the benefits for some of reducing contributions sends out a dangerous signal.”
AJ Bell added that the Government should go further in tackling the UK’s complex pensions tax system. “Rather than just reviewing how the taper interacts with public services and the NHS, the Government should broaden its horizons to consider the potentially harmful consequences of other pension tax measures,” suggested senior analyst Tom Selby.
“The Money Purchase Annual Allowance, for example, is poorly understood and severely hinders the ability of people to save in late life. Similarly, the lifetime allowance is a wormhole of complexity which, after successive cuts in recent years, affects an increasing number of people – particularly in the public sector.
“A review of retirement saving incentives aimed at removing unnecessary complexity and encouraging more people to save for their future is long overdue and could create a system people can genuinely engage with.”
The Treasury estimates that around a third of NHS consultants and GP practice partners could be affected by the tapering of the annual allowance, which reduces maximum pension contributions for those earning above £110,000.
Curtis Banks adds Prudential plan to SIPP
Independent SIPP operators Curtis Banks, has added the Prudential Trustee Investment Plan (Pru TIP) to its Your Future SIPP wrapper.
Dave Stratton, group sales director at Curtis Banks said the plan was a “natural addition” to the recently launched Your Future SIPP.“Advisers use the Pru TIP more and more to help protect the investments held by their clients as it provides smooth returns and works well in a blended portfolio.”
Pru TIP allows advisers to tailor investments to suit their clients’ individual attitude to risk and provides fund targeted withdrawals.
Using the plan via an independent platform also means that advisers may benefit from additional investment flexibility through using other investment partners or solutions within the SIPP.
The plan can be accessed via Your Future SIPP at an annual SIPP fee of £260 + VAT.
Skipton Building Society launches 120 day notice account paying 1.35%
Skipton Building Society has launched a new 120 day notice account and reissuing its Everyday Saver. The 120 day notice account pays 1.35% and can be opened with a minimum balance of £1. It is available in branch, by telephone, or by post.
Skipton’s Everyday Saver Issue 5 account pays different rates depending on account balance: £1.00 – £24,999.99 pays 0.50%; £25,000.00 – £49,999.99 pays 0.75%; £50,000+ pays 1.00%.
The Everyday Saver account can be opened and managed in any of our branches, by phone or by post and customers can save from £1 to £1m; joint accounts are allowed.
