The UK's Inland Revenue is to decide by October whether to offer concurrent members of additional voluntary contribution schemes a tax-free lump sum worth 25% of the fund.
The allowance would bring AVC’s into line with the tax benefits offered by stakeholder pensions. The proposal is understood to have the backing of the ABI who said in a circular to members: “ABI will be working closely with the Revenue on this project and a group of members involved in occupational pension scheme provision and administration have been identifies to assist with the work.”
The move is also likely to be welcomed by local authorities some of whom have been lobbying the Local Government Pension Committee to make representation to the Department of Transport Environment and the Regions to allow stakeholder pensions to be offered as alternatives to AVC schemes.
AVC schemes are considered inferior to stakeholder because of its tax free lump sum.
By James Wallace
This week's edition of Professional Pensions is out now.
Industry Voice: Sponsored by Eaton Vance
BNY Mellon has launched a range of reporting tools to help institutional investor clients track and evaluate portfolio investments based on environmental, social and governance (ESG) issues.
PP speaks to BESTrustees director Heather McGuire about her views on the CMA's review into the investment consultant and fiduciary management markets.