UK - Industry experts were not impressed by Gordon Brown's efforts in his pre-Budget speech to sweeten the pill for his controversial proposals on individual pensions limits.
The UK chancellor in his pre-Budget speech said that he would ask the National Audit Office to provide an independent evaluation of the numbers affected by the £1.4m cap by budget time.
He said this was because “consultation on the proposed single lifetime tax allowance for pension saving has revealed contrasting interpretations of its impact”
In his pension proposals, Brown also included a single set of rules that set the tax free lump sum at 25% of the value of an individual's pension fund; more flexible annuity rules; and provision for older workers to draw occupational pensions.
NAPF Chairman Terry Faulkner (pictured) said: “We have been urging government to simplify the arcane pensions tax system for years. Pension schemes need a simpler tax regime sooner rather than later. We could all quibble with some individual elements; but taken in the round, the government package is a significant improvement on what we have today.
“We are pleased that the government has taken heed of responses to the consultation carried out earlier this year and amended some of its proposals. Today’s announcements should ease the transition from the old regime to the new.”
Nigel Body, chairman of The Pensions Management Institute's external affairs committee said: “ The proposals affecting higher earners are more of a mixed bag. The reduction in the recovery charge to 25%, and the introduction of Enhanced Protection which at least seeks to avoid the spectre of retrospective taxation, are to be welcomed.
“We are also glad that the Government will ask the National Audit Office to review the £1.4m limit and the estimates of the numbers of individuals affected. However, we regret the decision not to link the Lifetime and Annual Allowances to National Average Earnings in future; this will increasingly encroach on middle income earners rather than catch a minority of high earners.
Kevin LeGrand, head of technical services Mellon Human Resources said the government's long-awaited publication of the detailed proposals of the new taxation regime for pensions had left most of the key questions unanswered.
The Big One - the size of the maximum lifetime fund that can be provided within a tax-approved regime - has been ducked, he said.
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